Operating rates of blast furnaces across Chinese steelmakers dipped 0.14 percentage point YoY on week

SHANGHAI, Jan 7 (SMM) - Operating rates of blast furnaces at Chinese steelmakers decreased year on year this week, as some steel plants were restricted by raw materials and turned into maintenance due to the continuous shortage of coke. An SMM survey showed that the average operating rate of BFs at steel mills in China rose 0.5 percentage point from the prior week and fell 0.14% from the previous year to 88% as of January 7. 

There have been multiple sporadic cases of the COVID-19 variant in many areas of China since this week, especially in Hebei Province. It was announced yesterday that it has entered a “state of war”, and schools have completely suspend offline education. The pandemic situation overseas has also worsened. For instance, UK is under lockdown while Japan is considering a total ban on foreigners from entering the country. Vaccination is already in progress but it will take time for everyone to be vaccinated.

On the fundamentals, social inventories piled up, and the seasonal weakening in demand continued. After the electricity restrictions ended, operating rates of electric furnaces rebounded significantly, and the decline in output caused by the decline in operating rates of blast furnaces has weakened the marginal fundamentals. However, affected by the sharp drop in the US dollar index and the sharp rise in the RMB exchange rate, commodities have generally risen, and the market generally has positive expectations to 2021. In addition, the prices of iron ore, coke, steel scrap and other raw materials are still high, which still supports steel prices. It is expected that steel prices are likely to keep fluctuating at high in the near term.

Operating rates of blast furnaces at Chinese steelmakers