Steel Mills' Profits to Hover at Lows in May

SHANGHAI, May 11 (SMM) - According to SMM estimation, profits of rebar produced by BF mills in east China stood at -42 yuan/mt as of April 30, down 78 yuan/mt from the end of March, and those produced by EAF mills were -54 yuan/mt, down 120 yuan/mt. In April, the steel prices slumped as a result of sharply growing supply while poor downstream demand, which led to a drop in the mills' profit margins. In mid-to-late April, as more steel mills carried out production cuts and maintenance, the prices of raw materials such as iron ore, coking coal, coke and steel scrap fell rapidly, preventing the steel mills from further losses. In May, the costs of steel mills will drop, while the steel prices may rebound slightly, enabling most Chinese steel mills to maintain production around the break-even point.