SHANGHAI, Jul 11 (SMM) – The operating rate of blast furnaces across China's 110 steel mills dipped 1.98 percentage points in June from May to stand at 86.94%, SMM survey showed.
The figure fell lower than expected, marking the biggest monthly decline so far this year. Beijing’s environmental reviews in 10 provinces and a 30% production cut at steel mills in Lianyungang, Jiangsu province for the Shanghai Cooperation Organisation (SCO) summit accounted for the drop.
The operating rate across blast furnaces is expected to rebound 0.4 percentage point to 87.34% in July, as those affected went back to operations when environmental reviews ended. However, the rebound will be limited by higher temperatures and rainy weather in July, which are set to slow downstream demand.
Blast furnace operating rates are likely to dip in Tangshan from July to August due to the fresh round of cutback locally in order to fight against air pollution.
While steel prices may face some pressure from the rebound in operating rates this month, there is limited downward room with support from the production cut in Tangshan, SMM believes.