Higher costs eat up China BF mills Aug margins

Posted on 15 September 2020

In August, China’s blast-furnace steel mills saw most of their steel margins squeezed by higher production costs especially with the multiple-year high imported iron ore prices, according to Mysteel’s latest monthly report.

For rebar, the most popular long steel product in China, the average margin among the country’s 91 sampled mills plunged Yuan 43/t on month to merely Yuan 25/t on average, according to Mysteel’s survey, as the production cost of molten iron among these mills jumped up Yuan 75/t on month to Yuan 2,480/t excluding the VAT last month.

In August, China’s imported iron ore prices had surged the most among all the steelmaking raw materials, and the monthly average price of the SEADEX iron ore price for 62% Fe Australian Fines grew $14.3/dmt on month to $122/dmt CFR Qingdao partly due to the the serious congestion at the Chinese ports with iron ore vessels waiting in a long queue for COVID-19 tests, Customs clearance and unloading as reported.

On the other hand, “and also the most important factor (for higher price of imported iron ore) was the robust demand from the Chinese steelmakers as they had been maintaining high production last month,” commented a Shanghai-based market insider.

Rebar output, for example, had been hovering at 3.8 million tonnes/week by the end of August among China’s 137 long steel mills under Mysteel’s weekly survey, or a high level since Mysteel commenced the survey in February 2015, being only inches away from the highest record of 4 million tonnes in early July.

China’s national price for HRB 400 20mm dia rebar grew Yuan 53/t on month to Yuan 3,858/t as of August 31, but insufficient to offset the rises in the steelmaking costs, according to Mysteel’s data.

As for flat steel, the medium plate margin also fell Yuan 59/t on month to Yuan 89/t, according to the survey, as its end-users including the shipbuilders had been suffering from a slow-down in new bookings.

The profit of hot-rolled coil, however, was the only one of the three long and flat steel products under Mysteel’s monthly monitoring posting a Yuan 13/t on-month gain to Yuan 163/t, mainly thanks to the robust price strengthening in August on better demand from the automobile and home appliance manufacturers, the infrastructure construction and containers making, according to Mysteel’s report.

As of August 31, the country’s national price for Q235 4.75mm HRC gained Yuan 96/t on month to Yuan 4,014/t including 13% VAT, according to Mysteel’s assessment.

 

Written by Venus Wang, wangyi@mysteel.com

Edited by Hongmei Li, li.hongmei@mysteel.com

Source : Mysteel Global