SHANGHAI, Apr 29 (SMM) — Operating rates of blast furnaces at steel mills rose 0.8 percentage point from a week ago and increased 2.3 percentage points from a month ago to 86.6% as of April 29, SMM survey showed. Hebei maintained strict production restrictions since the beginning of this week, Handan joined the ranks of production restrictions, while blast furnaces in other regions resumed production under the stimulus of high profits. Therefore, operating rates of blast furnaces across Chinese steelmakers rebounded from last week.

As the May Day holiday approaches this week, the market's risk aversion heated up, some participants left the market to wait and see, and fluctuations intensified. The Ministry of Finance of the People's Republic of China issued an announcement on the cancellation of export tax rebates for some steel products and the adjustment of import tariffs for some products last night. After the announcement, the night market opened slightly lower, while then it rose sharply. SMM believes that the government's action reflects the main tone of policies of encouraging imports and restricting exports. In fact, news of the cancellation of export tax rebates has been repeatedly reported since February this year. Various versions have been released during this period, and the most recent one mentioned that the tax rebate for all common steel varieties will be reduced to 0, while from the final official list this time, the tax rebates for HRC, thick plate, pipe, color coating and other related varieties are mainly cancelled. Common cold-rolled coils, hot galvanizing, aluminized zinc, and oriented silicon steel still retain a 13% tax rebate, which is more optimistic than the most stringent version of the previous rumors. At the same time, compared with overseas prices, the current domestic prices are at a low level. There is still a certain profit margin for the increased costs after the cancellation of the export tax rebate. Therefore, the profit is exhausted, while it provides a more solid foundation for the increase of prices. If there are no major negatives during the holiday period, it is expected that prices will still have upside space after the holiday. However, with the completion of the delivery of the 2105 contract, the benefits will be digested, and the seasonal weakening of demand will gradually be highlighted. Steel prices may be subject to adjustment risks in mid to late May.

Operating rates of blast furnaces at Chinese steelmakers