China blast furnace operating rates fell again amid emergency responses to heavy air pollution

SHANGHAI, Dec 3 (SMM)—Operating rates of blast furnaces at Chinese steel makers dropped this week as Tangshan and Handan of Hebei province once again launched emergency responses to heavy air pollution and as some steel mills have started maintenance recently.

An SMM survey showed that the average operating rate of BFs at steel mills in China dropped 0.41 percentage on the week to 88.1% as of December 3.

While coke, coking coal, iron ore and hot-rolled coil futures all surged to new highs in 2020 this week amid a slew of positive news, rebar futures relatively lagged behind due to its weakening fundamentals. China’s Manufacturing Purchasing Managers’ Index (PMI) stood at 52.1% in November, up by 0.7 percentage point month on month, which was above the threshold for nine consecutive months, indicating that the recovery growth of the manufacturing industry has accelerated. In addition, smooth power transition from the Trump administration to the Biden team, expectations of a new US fiscal stimulus package and positive progress in Covid vaccine research also boosted ferrous metals prices.

In the short term, HRC prices are expected to remain stronger than rebar prices. However, as steel products shipped from north China have arrived at southern markets and steel makers, driven by decent profits, have started to ramp up production, steel prices may begin to fall in the near term.  

China BF operating rates at steel makers