The increase in losses was caused by falling prices and demand, as well as seasonal factors
Chinese blast furnace steel plants suffered losses from the sale of rolled steel in July 2024. Negative sentiment in the domestic market caused a sharp drop in steel prices. This is evidenced by Mysteel’s latest monthly survey of 91 blast furnace plants.
In July, the average loss from rebar sales among surveyed Chinese steel producers was 249 yuan per ton ($35/t). This is 151 yuan per ton more than in June of this year.
Meanwhile, mills lost an average of 150 yuan/t on hot-rolled coil sales in July, compared with a profit of 19 yuan/t a month earlier.
The sharp increase in losses of Chinese steel mills was mainly caused by a rapid drop in rental prices. Demand from end users remained low during the traditional summer slump, while high temperatures and frequent downpours in most regions of China affected a number of sectors such as construction.
In addition, many Chinese rebar factories and traders made significant price concessions in July to boost sales and reduce inventory as new rebar production and quality standards come into effect on September 25.
Production costs at Chinese steel mills also fell slightly last month, but the reduction failed to boost their profitability.
As reported earlier, in January-July 2024, China reduced steel production by 2.2% y/y – to 613.72 million tons. In July, steel production in the country fell by 9.5% compared to June – to 82.94 million tons, which was caused by a decrease in demand and a reduction in the margins of steelmakers. At the same time, compared to the same period last year, this indicator decreased by 9%.
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