SHANGHAI, Aug 27 (SMM) - Operating rates of blast furnaces at Chinese steelmakers dipped this week, as some mills conducted maintenance due to the sharp reduction in profits.
An SMM survey showed that the average operating rate of BFs at steel mills in China lost 0.4 percentage point from the prior week to 89.9% in the fourth week of August.
The People's Bank of China (PBOC) has increased the net investment of funds in the open market this week, and the short-term capital supply in the inter-bank market has further loosened. The weighted interest rate of overnight repurchase dropped sharply by more than 40bp, breaking 2%, and stood around 1.92%.
On the other hand, the easing of US-China tensions will continue to promote the implementation of the first-stage economic and trade agreement between China and the US.
On the fundamentals side, steelmakers are more reluctant to produce more material due to the sharp reduction in profits. At the same time, production is likely to be limited in Tangshan, and the pressure on the supply side may be reduced in the near future.
On the demand side, steel purchases will continue to increase in most construction sites in September, and cement prices in Jiangsu, Zhejiang, Shanghai, Anhui and other places have risen sharply in recent two weeks, which also reflects that the firm building demand, according to an SMM survey. The recent market shock adjustment has basically led to increased risks, but steel prices are likely to have upside potential amid multiple beneficial factors.
A steelmaker in east China has completed maintenance of blast furnaces and restarted production this week, while a steelmaker in north China plans to shut down before September. Another mill in northeast China is under maintenance, according to the SMM survey.
Operating rates of blast furnaces at Chinese steelmakers
