SHANGHAI, Jun 8 (SMM) – The operating rate of blast furnaces across China's 110 steel mills stood at 88.9% in May, up 1.7 percentage points from April, SMM surveyed. 

High downstream demand accounted for the rise. However, the upward room will be limited given production cuts in the non-heating season and as nationwide environmental reviews started in early June. 

Profits across steel mills that returned to stand above 1,000 yuan/mt in May also contributed to the rise in operating rates. Output of pig iron and crude steel increased as a result. 

Profits of hot-rolled coil in May averaged 1,201 yuan/mt, up 328 yuan/mt from April, and that of rebar increased 279 yuan/mt from April to 1,056 yuan/mt in May. 

The operating rate across blast furnaces is expected at 88.4% in June, down 0.5 percentage points from May. 

Environmental reviews in 10 provinces and a 30% production cut at steel mills in Lianyungang, Jiangsu province for the Shanghai Cooperation Organisation (SCO) summit will account for the lower operating rate across blast furnaces. 

Higher temperatures and rainy weather are likely to slow downstream demand from construction sites in the second half of June. 

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