Steel Mills to Remain at Break-Even Point despite Lower Cost

SHANGHAI, Mar 2 (SMM) - The second round of coke price cuts were implemented in January, and iron ore prices fell, helping steel mills using blast furnace to return to profitability. Although the market got off to a flying start after CNY holidays, pessimistic market combined with sell-off of lower-priced cargoes by distributors significantly pushed down spot prices in early February. Consequently, profits at steel mills shrank sharply, with some mills incurring small losses.

Loss-making steel mills have lacked the enthusiasm for production, and in turn slowed raw material purchases. Prices for iron ore and coke will lack the ability to rise. With a third round of coke price cuts proposed in early February, the cost at steel mills should fall further. The mills are expected to stand around the break-even point in the near term.