Privately-owned mills produce 60% of China’s steel in H1
The privately-owned mills in China’s steel industry contributed to a majority of 58.6% of China’s total steel output in the first half of 2018, according to a post on the China Chamber of Commerce for Metallurgical Enterprises (CCCME) on August 28.
The proportion was steady from the previous year’s level, with the steel output recorded at 264 million tonnes, or 4.6% higher than a year ago, lower than the national growth at 6%, Mysteel noted.
Privately-owned steel mills’ pig iron output reached 202 million tonnes, or 54.2% of the country’s total, and finished steel production, at 351 million tonnes, contributed to 66.1% of the country’s whole, according to CCCME.
These mills, together with the state-owned steel producers, have been in the driver’s seat in the Chinese steel market, benefiting from steel price surges amid low finished steel stocks with the government-initiated frequent and large-scale restrictions on steel mills out of pollution concern since the beginning of 2018, and in H1, the 160 major privately-owned steelmakers reaped Yuan 99.6 billion ($14.6 billion) in profits, or 135% higher on year, according to CCCME.
The top three profit-making privately-owned steel producers in H1 were Jiangsu Shagang Group, Fangda Special Steel and Jianlong Heavy Industry Group, with Shagang’s profit totalling Yuan 12.4 billion, CCCME disclosed.
The privately-owned steel mills’ average margin in steel sales, however, seemed at lower levels in the industry at Yuan 569/tonne, as many Chinese steel mills estimated their margins at Yuan 600-1,000/t since the beginning of this year when queried by Mysteel.
“Most steel mills’ margins must have been above Yuan 1,000/t nowadays since the domestic steel prices have been at the year’s or multi-years’ high levels,” a steel trader from Northeast China said.
A Shanghai-based industry source agreed, predicting the average profit of rebar for the mills “may have surged to Yuan 1,300-1,400/t so far. This is a significant number especially in the traditional dull season for steel consumption”.
He is confident upon the steel margin to grow further for the rest of year, as demand will revive in the autumn months of September and October while supply may reduce further with the frequent emergency restrictions and a wider-range curbing among Chines steel mills in the 2018 winter months starting mid-November.
Mysteel’s national average benchmark price for HRB 400 20mm dia rebar, a key indicator of China’s steel market performance, it hit and refreshed its year’s high since August, reaching as high as Yuan 4,636/t as of August 21 before subsiding to Yuan 4,556/t as of August 28 including 16% VAT.
Other market participants including traders and downstream users, however, have been passively following the pace set by the steel mills so far this year.
“Steel producers have totally embraced their power in a seller’s market, we used to be able to secure some lower-prices supplies from the mills via negotiations and play our friendship cards, but now they are unwilling to do us such favours because their stocks have always been low,” a Tangshan-based steel trader grumbled.
Rebar stocks at 139 major mills hit a new low since 2018 in the week of August 16-22, down another 0.14% on week to 1.63 million tonnes, according to Mysteel’s latest weekly survey.
Written by Venus Wang, wangyi@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
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