NBS: Chinese ferrous sector’s Jan-Oct profit growth down
In the first ten months, the ferrous industry recorded a gross profit at Yuan 355.3 billion ($51.5 billion), according to the latest data released by China’s National Bureau of Statistics (NBS) on November 27.
A Shanghai-based market analyst took the changes with little surprise, noting that Chinese steel mills have seen their profit growth declining since June after a year’s high in 2018, recording 114.7% year-on-year increase for January-May,.
“The Chinese steel industry had been operating on quite a happy note until October thanks to the supply-side reform and frequent capacity restriction efforts in many regions for environmental protection since 2016, and they have accumulated quite some profits in the past couple of years, but it is well acknowledged that this can’t last forever, especially when the base for comparison is moving up,” he said.
Last month, China’s domestic steel prices refreshed near-term highs amid higher-than-expected demand from downstream users and traders after the National Day holiday with the national HRB 400 20mm dia rebar price, for example, jumping Yuan 198/t or 4.4% on month to Yuan 4,728/t including 16% VAT, which was an intra-year high.
Rises in the domestic steel mills’ production cost in general over the month, however, offset greater margin increases even with higher steel prices, a Hebei-based steel industry source noted. NBS data shared that the cost increased 13.5% on year to Yuan 4.7 trillion in total over January-October, with the growth being 0.5 percentage point higher than that over January-September, partly due to more capital injection in environmentally-friendly facility installation and higher costs in steelmaking raw materials, the source explained, and Mysteel’s series of surveys illustrate so too.
Mysteel’s survey on the molten iron cost among the 91 blast-furnace mills across China, for example, rose 1.1% on month to Yuan 2,310/t as of October 31, their production cost for rebar rose Yuan 94/tonne or 2.7% on month or that for hot-rolled coil up Yuan 38/t or 1.1% on month, and the 62% Australian iron ore fines monthly average pricing index, for example, rose 6% on month to $72.8/dmt CFR Qingdao by the end of last month.
Starting November, Chinese rebar producers will see their production cost rise further as they have to add higher-priced alloys including vanadium to meet new and higher rebar quality standards, as reported.
Over the first ten months, among all the industrial enterprises, state-controlled companies posted the highest profit growth at 20.6% year on year.
Written by Venus Wang, wangyi@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
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