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MONTHLY: China BF mills profits recover in February

Profits among the 91 Chinese blast-furnace steel mills sampled as part of Mysteel’s monthly tracking recovered in February, mainly thanks to the growth in domestic steel prices after the Chinese New Year holiday ended on February 17, the latest monthly report released on March 8 shows. The mills’ steelmaking costs rose further last month, however.

For February, the sampled mills’ profit margins on rebar averaged Yuan 113/tonne ($17.3/t), reversing up by Yuan 211/t compared with the loss in January, while the margin on medium plate posted a sharper on-month gain of Yuan 304/t to average Yuan 241/t, according to the survey. Last month, the surveyed mills also achieved the largest profit on their sales of hot-rolled coils (HRC) among all the products at Yuan 269/t, up by Yuan 301/t from the prior month.

The improvement in the steelmakers’ profit margins was attributed to the robust steel prices in the domestic market after the CNY break on expectations of better demand from end-users, Mysteel Global noted.

For example, the national price of HRB 400 20mm dia rebar had grown to Yuan 4,688/tonne ($719/t) including the 13% VAT as of February 26, up Yuan 338/t from one month before, and that of Q235 4.75mm HRC had increased by Yuan 365/t during the same period to Yuan 4,867/t including the VAT, according to Mysteel’s data.

The margins improved despite the further rise in mills’ production costs last month, chiefly from higher coke prices. Last month, the average price of secondary metallurgical coke in North China rose by a significant Yuan 190/t on month to Yuan 2,697/t, though Mysteel SEADEX 62% Australian Fines retreated $3.1/dmt on month to $164.7/dmt CFR Qingdao on average during February, according to the monthly report.

Last month too, the molten iron cost among the 91 BF mills moved up for the tenth successive month to Yuan 3,019/t excluding the 13% VAT, higher by another Yuan 24/t or 0.8% on month. The average production cost for making rebar increased to Yuan 4,377/t including the 13% VAT, higher by Yuan 54/t on month, and that for HRC saw the same on-month increase to average Yuan 4,493/t including the VAT, the survey showed.

Written by Nancy Zheng, zhengmm@mysteel.com

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