SHANGHAI, Oct 15 (SMM) - Operating rates of blast furnaces at Chinese steelmakers dipped this week, as a slew of environmental protection policies are introduced after the National Day holidays.
An SMM survey showed that the average operating rate of BFs at steel mills in China lost 0.78 percentage point from the prior week to 88.2% as of October 14.
Steel prices rose sharply due to the news of strengthening gas control measures in Tangshan and its surrounding areas post-holiday. At the same time, coke and coking coal prices surged as news came that China stopped importing Australian coal, with the most-traded SHFE coke contract at one point even hitting a new 14-month high, which further boosted steel prices.
From the later trend, the total impact of the limited production policy issued by Tangshan in the autumn and winter of 2020-2021 has significantly reduced compared with last year, and the short-term impact on steel production in Tangshan is relatively limited. On the other hand, some downstream users still need to restock after the National Day holidays. Strong demand will continue to support steel prices before the weather in the north turns cold.
However, market sentiment cooled after investors digested these positive news. Risks will gradually increase in the following weeks if destocking is slower than expectations.
Operating rates of blast furnaces at Chinese steelmakers
A steelmaker in north China shut down a blast furnace of 580 due to capacity replacement. Another steel mill in southwest China has turned into maintenance for the ultra-low emission transformation for about 10 days from October 12, 2020. At the same time, a bar rolling line will also be under maintenance. A steelmaker in south China has no new maintenance plan for the time being. Another steel mill in northeast China is worried about the later demand as cold weather is likely to come ahead of schedule, and the price difference between the north and the south is limited, dampening the cargoes shipped to north China, according to the SMM survey.