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China BF mills fall into lossmaking in January

Posted on 10 February 2021

China’s 91 blast-furnace steel mills under Mysteel’s monthly tracking fell into lossmaking in both major long and flat steel products ranging Yuan 32-98/tonne ($5-15/t), mainly due to the continuous rally in all the major steelmaking raw material prices such as iron ore and coke, according to Mysteel’s latest monthly report released on February 9.

For January, the sampled mills saw their rebar margins fall into the negative zone, posting an average gross loss of Yuan 98/t, or down Yuan 190/t on month, as their rebar production cost alone grew by Yuan 173/t from December to Yuan 4,323/t including the 13% VAT last month.

Not only rebar, hot-rolled coils (HRC) and medium plate produced by the 91 mills were also posting losses on higher costs, as the former’s average production cost was at Yuan 4,439/t including the VAT in January, or up Yuan 185/t on month, and the losses, thus, averaged Yuan 32/t for last month, or having dived Yuan 346/t on month.

Medium plate production costs grew by Yuan 156/t on month to Yuan 4,456/t including the VAT on average, which resulted in a loss of Yuan 63/t on average, compared with a profit at Yuan 185/t on average last December, according to Mysteel’s survey.

In January, the molten iron cost among the 91 Chinese BF mills rose for the ninth month to Yuan 2,995/t excluding the 13% VAT, or up another Yuan 163/t or 5.8% on month, as Mysteel’s SEADEX 62% Fe Australian Fines iron ore price, for example, gained $12.05/dmt on month to $167.8/dmt for the January average, and the national composite price of coke jumped by Yuan 309/t on month to Yuan 2,507/t for the January average, according to Mysteel’s monthly report.

Last month, China’s re-rollers, however, still managed to operate with profits due to the comparatively less strengthening in billet prices than the upstream raw materials, and Mysteel’s monthly survey showed that rebar margins among the 11 re-rollers across China averaged Yuan 50/t, though down Yuan 230/t on month, as their monthly rebar production cost alone increased Yuan 150/t on month to Yuan 4,200/t including the VAT.

Source : Mysteel Global