Operating rates of blast furnaces across Chinese steel mills dropped 1.4 percentage points on week

SHANGHAI, Jun 18 (SMM) - Operating rates of blast furnaces at steel mills dropped 1.4 percentage points from a week ago and 1.1 percentage points from a month ago to 85.8% as of June 17, SMM survey showed.

The steel market returned to fundamentals in June. The profits of steel mills were greatly reduced to near the cost line. Overhauls increased. Supply and demand both weakened amid increased maintenance and the news of production restrictions.

Crude steel output totalled 473.1 million mt from Juanuary to May 2021, an average of 94.62 million mt per month. The crude steel output in the same period in 2020 was 411.75 million mt, with the monthly average output at 82.35 million mt.

If 2021’s total output of crude steel is at the same level of 2020’s 10.53 billion mt, the monthly average output from June to December 2021 will be 82.84 million mt, down 11.78 million mt from the average amount from January to May. Therefore, the annual output is hard to decrease.

As the 100th anniversary of the founding of the CPC is approaching, environmental protection efforts are being strengthened around the overall goal of ecological civilisation construction and carbon peaking and neutralisation. The expectations of production restrictions are still strong.

Hebei's steel mills in production have been reduced from 107 to 68 mills, and steel production capacity has been reduced from a peak of 320 million mt to less than 200 million mt. The task of reducing production capacity during the "13th Five-Year Plan" period has been outperformed, and the goal of steel capacity withdrawal from the city has basically been achieved.

Steel products have entered the off-peak season of consumption, overseas demand is weakening, and domestic demand growth is lower than expected. Downstream demand for automobiles and home appliances is weak as well. Steel prices may fluctuate lower in the short term.

Some domestic policy adjustments are gradually taking effect, and the implementation of crude steel reduction policy will be accelerated.

Operating rates of blast furnaces