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China mills’ production stable amid heavy rains

As China enters the fifth week of the rainy season which began in early June, heavy rains and occasional floods are dampening steel demand to a large extent, though production at mills remains little affected by the wet weather, mill sources said on Monday.

The rains receded for just a single day – on July 3 – before more torrential rains started to lash provinces along the Yangtze River with renewed vigour, including East China’s Jiangsu, Southeast China’s Zhejiang, and Central China’s Anhui, Hunan, Hubei, as well as Southwest China since July 4. The country’s weather bureau, China Meteorological Administration, predicts the rains will continue for at least the next few days.

Heavy rains present a multitude of problems for steelmakers such as disrupting transportation of raw materials, control of the water content in coke and iron ore, and control of air flow into the blast furnace, according to an official from a steel mill based in Jiangsu. But all these can be “resolved by technical adjustment, and the production overall will not be affected much,” he told Mysteel Global.

“Production at our plant retains stable. All processes run as per normal, except that it becomes a bit harder to find scrap. But luckily we have sufficient inventories of that in our yard,” an official from a steel company based in East China’s Shandong explained.

Mills in Anhui as well as in South China’s Guangdong quizzed by Mysteel all confirmed that their production is running smoothly despite of the battering rains. “Now our raw material stock yards are all closed, so there are few worries about the rains,” one of them commented.

With the stricter requirements demanded of steelmakers for environmental protection – the ultra-low emission standards for the steel industry – that were finalized in May last year, China’s steel mills are required to cover and seal their raw material stock yards to prevent dust and air pollution during operations, Mysteel Global understands.

In contrast to steel production where operations are generally normal, steel sales continue to be weak with the pouring rains slowing outdoor construction work or forcing worksites to be closed completely, according to the Guangdong official.

Over June 28-July 3, the daily trading volume of construction steel comprising rebar, wire rod and bar-in-coil averaged 208,910 tonnes/day, around the same level as that for all June but much lower than the over-230,000 t/d level in the robust months of April and May, according to Mysteel’s survey across 237 Chinese steel traders nationwide.  

Written by Olivia Zhang, zhangwd@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com