Posted on 17 Feb 2022
Profit margins among the 91 Chinese blast-furnace steel mills sampled regularly by Mysteel slipped in January, mainly due to the increase in production costs, according to the latest monthly survey.
Last month, the margin on rebar sales that steel mills under Mysteel's survey enjoyed averaged Yuan 51/tonne ($8/t), slipping by Yuan 92/t on month after just one month's recovery. In parallel, the margins the mills earned on hot-rolled coil and medium plate averaged Yuan 156/t and 205/t, easing by Yuan 66/t and Yuan 110/t on month respectively.
The decline in the surveyed mills' margins during January was mainly due to the rise in production costs they experienced, caused by the surge in raw materials prices including those of imported iron ore and class 2 metallurgical coke, the survey found.
For January, the surveyed mills' costs for making molten iron averaged Yuan 3,385/t excluding the 13% VAT, up by Yuan 142/t or 4.4% on month after two months of declines.
Last month, the price of class 2 met coke in North China grew by Yuan 380/t on month to Yuan 2,977/t on average, while the price of Mysteel SEADEX 62% Australian Fines averaged $131/dmt CFR Qingdao, higher by $18/dmt on month, according to Mysteel's survey.
High production costs propelled Chinese steel prices upwards last month, even though January is traditionally a slack steel-consumption period. Spot trading volume continued to shrink with the Chinese New Year holiday over January 31-February 6 drawing near, Mysteel Global noted.
As of January 30, China's national price of HRB400E 20mm dia rebar, for example, was assessed by Mysteel at Yuan 4,817/t including the 13% VAT, higher by Yuan 91/t from December 31.
The daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil among the country's 237 traders under Mysteel's tracking averaged 104,903 tonnes/day in January, down 59,459 t/d or 36.2% on month.
Source:Mysteel Global
