China: Blast-furnace capacity use slumps to a 17-month low

Over June 25-July 1, blast furnace (BF) capacity utilization rate among the 247 steel mills under Mysteel’s survey fell to the lowest since March 2020, touching 81.01% after the fourth week of decline or a sharp drop of 10.16 percentage points on week, mainly due to the curbing on the steel operations in North and East China for the grand celebration in Beijing.

Various local authorities in some provinces of North and East China such as Hebei and Shandong provinces imposed curbing on their local steel production as early as on June 22 until July 1 to reduce pollution for the celebration of the centenary of the Communist Party of China on July 1, as reported.

The plunge in the BF capacity also saw daily molten iron output among the 247 mills fell by 270,500 tonnes/day on week to 2.16 million t/d in total, and the operational rate of their BFs dropped by 21.74 percentage points on week to 57.94%, or a new low since Mysteel launched this survey on March 2018, as the curbing efforts were mainly through the means of temporarily idling sintering plants and blast furnaces, Mysteel Global noted.

Besides, the continuing softening in the domestic steel prices in a seasonable low demand period in summer also dampened some steel mills’ production enthusiasm with thinning steel margins, a Shanghai-based market watcher commented.

As of July 1, China’s national price of HRB400E 20mm dia rebar under Mysteel’s survey softened another Yuan 19/tonne ($2.9/t) on week to Yuan 4,949/t and including the 13% VAT, and in tandem, the proportion of profitable mills among the 247 integrated steel mills under Mysteel’s tracking scored 71.43%, a record low since the survey was launched on March 1, 2018.

As of Thursday, inventories of imported iron ore of all forms at these 247 mills including the volumes at the works, port stockyards and on the water, decreasing for a second week to 113.8 million tonnes, which would be lasting 43.19 days, or the longest since Mysteel launched the survey in January 2020, or up 4.12 days on week, as their daily consumption decreased by 348,300 t/d to 2.63 million t/d in total.

Over the same survey period, Mysteel’s smaller-scale study among 163 BF steel plants across China decreased sharply by 21.69 percentage points in their BF capacity utilization to 51.01% as of July 1, or a record low since August 2012 when the survey commenced.

Written by Lindsey Liu, liulingxian@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.