Operating rates of blast furnaces across Chinese steelmakers dipped 0.6 percentage point on week

SHANGHAI, Feb 4 (SMM) - Operating rates of blast furnaces at Chinese steelmakers continued to decrease this week, as the Shaanxi-Shanxi-Gansu-Sichuan Forum recommended that enterprises in the region turned into maintenance. In addition, as the Chinese New Year approaches, some steel mills have stopped production for holidays. An SMM survey showed that the average operating rate of BFs at steel mills in China fell 0.6 percentage point from the prior week and rose 2.3% from the previous year to 86.3% as of February 4. 

Recently, Shanghai, Shenzhen, Hangzhou and other places have introduced new real estate policies. Shanghai has raised the threshold for buying houses, and has also tightened the conditions for issuing real estate loans. Housing loans can only be granted to individuals who purchase houses whose main structure has been capped. At the same time, the net withdrawal for many days has resulted in a tightening of funds. Iron ore and coke, which performed strongly in the early stage, are also under pressure due to the voice of the Ministry of Industry and Information Technology to ensure a substantial decline in crude steel output in 2021, which in turn has negative feedback on steel prices.

Markets have entered a closed state one after another since the beginning of this week, and transactions became increasingly tepid. Tangshan steel billet prices were locked at 3,850 yuan/mt, and the spot volatility narrowed. The quotation is basically affected by the capital. As the CNY approached, more electric furnace plants stopped production. Regional steel mills represented by the Shaanxi-Shanxi-Gansu-Sichuan Forum started off-season maintenance due to poor profitability, and steel mill supply declined slightly. Meanwhile, the consumer side also showed a sharp decline, and inventories continued to accumulate, which suppressed the quotation. The off-season effect of the steel industry is obvious now. Although steel mills have reduced production but their efforts are limited, steel prices may rebound before the holiday, and continue to fluctuate weakly.

Operating rates of blast furnaces at Chinese steelmakers