Chinese blast furnace steelmakers earned higher profits producing rebar in August compared with July, thanks to the climb in price of the long product last month which saw rebars repeatedly refresh the intra-year record. This is based on the findings of Mysteel’s latest production study of 101 steel firms nationwide comprising 91 blast furnace mills and 10 re-rollers.
The study spanned July 26-August 25 and focussed on the profit margins of three major carbon steel products, comprising rebar, hot-rolled coil and medium plate. The results showed that the profits that blast furnace mills earned making rebars jumped the most last month, expanding by Yuan 153/tonne ($22.5/t) on month to Yuan 1,000/t. The mills’ average margins on medium plate gained Yuan 35/t on month to Yuan 846/t. However, their profits increased the least on hot-rolled coil – edging up just Yuan 22/t over the month to Yuan 739/t.
Though many mills were under the pressure of output cuts in cities and municipalities, steelmakers in general seized the chance of enlarging their profits by means of frequently raising their list prices. For example, Jiangsu Shagang Group, China's largest privately-owned steelmaker, raised prices of all its long steel products for three straight ten-day sales periods during August, as reported. “It seems there are no signs yet that Shagang will stop its spree of increasing list prices,” a Nanjing-based industry source said.
As of August 24, Mysteel’s national average benchmark price for HRB 400 20mm dia rebar had gained Yuan 360/tonne ($53/t) on month to reach Yuan 4,592/t including 16% VAT. Moreover, Mysteel’s price tracker shows the rebar price is still on track to climb higher.
Meanwhile, the profits of re-rollers in making rebar were squeezed by high production costs over the month. Their margins on the bars lost Yuan 40/t on month to Yuan 135/t during the survey period. The re-rollers’ production costs in making rebar surged Yuan 300/t on month to Yuan 4,300/t including 16% VAT.
The month-long production curtailments imposed on steelmakers in North China’s Hebei province stimulated the average price of Tangshan Q235 billet to jump Yuan 285/t on month to reach Yuan 4,018/t during the same period, the study showed.
Besides the rise in billet prices, prices of other raw materials also increased significantly last month. Mysteel’s 62% iron ore pricing index largely increased $3.96/dmt on month to $68.34/dmt CFR Qingdao. The average price of second-grade metallurgical coke expanded Yuan 50/t on month to Yuan 2,225/t including 16% VAT, according to the study.
Written by Venus Wang, wangyi@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Table 1 Production costs and profits for rebar, HRC and plate
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Table 2 Production costs and profits of steel rerolling mills
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