SHANGHAI, Jul 2 (SMM) — Operating rates of blast furnaces at steel mills fell 2.7 percentage points from a week ago and decreased 3.8 percentage points from a month ago to 82.2% as of July 1, SMM survey showed. In order to greet the 100th anniversary of the founding of the party, Tangshan, Hebei and other places strictly implemented production cuts and shutdowns, resulting in a sharp drop in operating rates of blast furnaces. Production will gradually resume next week, and operating rates are expected to rebound.
At present, domestic steel market has entered the traditional off-season for demand. On the demand side, with the end of concentrated operating of construction sites and the impact of high temperature and rainy weather, end-user demand for steel weakened. On the supply side, the effect of production restrictions did not appear. Domestic crude steel output remained high, and the supply side did not shrink with fluctuating supply and demand. The turning point of domestic steel inventory has appeared since the beginning of June. It is expected that the inventory will continue to increase in July, and there are still uncertainties in the market. On the one hand, the middle stream and downstream of the Yangtze River will continue to set out of rainy season, but the high temperature and summer weather will affect the construction, and the demand side will be difficult to increase. The tight capital situation will be alleviated. On the other hand, the production cost remains high and the profit of the steel mill is suppressed. Production willingness will decline, and the supply side pressure may slow down in the later period. Therefore, domestic steel prices will continue to fluctuate in the face of weak supply and demand.
International factors are highly variable in the near term, and there is a risk that the prices of bulk commodities such as iron ore will fall. Once the prices of raw materials fall, the focus of cost support will shift downward. The market trend in the later period will depend on the industry policy. Whether the policy of reducing crude steel is continued or postponed will affect the trend and change of market prices.
Operating rates of blast furnaces at Chinese steelmakers
