SHANGHAI, Apr 15 (SMM) — Operating rates of blast furnaces at steel mills rose 0.5 percentage point from a week ago and fell 2.48 percentage points from a month ago to 84.5% as of April 15, SMM survey showed. The news of Tangshan's resumption of production and Handan's production restriction led to a slight recovery in operating rates this week.
Recently, national leader Li Keqiang presided over a symposium between economic situation experts and entrepreneurs. At the meeting, the participating companies reported that the sharp rise in commodity prices brought great pressure and lifted up costs. Premier Li said that he would strengthen market regulation of raw materials and other materials, ease the cost pressure of enterprises, maintain the continuity, stability and sustainability of macroeconomic policy, and the policy will not make a sharp turn. Affected by this, steel prices fell sharply on Monday. However, as the market continued to spread the news that Hebei Wu'an and Handan will implement environmental protection and production restrictions, he market stabilised and rebounded. SMM learned that the proportion of production restrictions in Wu and Handan was about 30%, and the production restriction documents may be implemented around April 20. Except Hebei, environmental protection efforts in other regions are also tightening. The third batch of the central government in the second round Eco-environmental protection inspections were launched a few days ago, and they have carried out inspections for about one month in 8 provinces (regions) including Shanxi, Liaoning, Anhui, Jiangxi, Henan, Hunan, Guangxi, and Yunnan. It is understood that the environmental protection group has now settled in Yunnan, and some steel plants have begun to stop production and carry out environmental protection upgrades. In addition, from April 14 to April 23, Guizhou also started the seventh round of environmental protection inspections. Although the current steel mills are profitable, it is difficult for the supply side to increase significantly in the near term due to the government's increasing environmental protection efforts, .
On the demand side, in March, the hours of operation of Komatsu excavators increased by 178.4% month on month and 7.7% year on year. In March, automobile production and sales increased by 63.9% and 73.6% year on year, respectively, while the export of home appliances also maintained a 41.4% growth, and the transaction volume of building materials also maintained the peak season level of more than 250,000 mt. The fundamentals still had support in the near term. However, the acceptance of downstream industries declined at high prices, and there was limited room for demand to continue to rise. Recently, there is widespread rumors in the market that the steel export tax rebate will be cancelled. SMM assesses that the short-term impact may be limited when the domestic and foreign price gaps are large. However, if the high price gap cannot be maintained in the later period, the market will face relatively high risks in May.
Operating rates of blast furnaces at Chinese steelmakers