Major Chinese steelmakers’ steel output, inventories declined further in mid-July, first-half profits tumbled 55% on year – industry body
Major Chinese steelmakers’ steel output, inventories declined further in mid-July, first-half profits tumbled 55% on year – industry body

Major Chinese steelmakers’ steel output, inventories declined further in mid-July, first-half profits tumbled 55% on year – industry body

 

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China’s steel output continued to decline in mid-July as steelmakers reduce production amid sluggish demand and falling steel prices, driving steel inventories to drop further, according to the country’s largest steel industry association.

China’s major steelmakers produced 20.38 million tonnes of crude steel in the period of July 11- 20, with daily average output at 2.04 million tonnes, falling 1.8% from the previous ten days, showed data released by the China Iron and Steel Association (CISA) on Monday.

During the same period, the steelmakers produced 19.01 million tonnes of pig iron and 19.95 million tonnes of steel products, respectively, falling 0.7% and 1.1% from previous ten days, it said.

The companies’ steel inventories stood at 19.03 million tonnes during the ten-day period, falling by 1.49 million tonnes or by 7.3% from the same period in June, said the association.

Social inventories of the five major steel products in China’s 21 major cities stood at 11.57 million tonnes in the period, falling by 3.8% from the previous ten days, showed the data.

Due to sluggish market demand, falling steel prices and weakening profits, many steelmakers have been cutting crude steel production. Related…

Earlier data from the National Bureau of Statistics (NBS) showed that the country’s crude steel output totlaed 5.27 trillion tonnes in the first half of the year, falling 6.5% from a year earlier, and pig iron output reached 4.39 trillion tonnes, down 4.7% on year.

According to CISA’s data on Monday, its member steelmakers, mostly large- and medium-sized mills, made a combined profit of 103.4 billion yuan in the first half, slumping 55.47% from the same period last year.

The steelmakers generated a combined operating revenue of 33.4 trillion yuan in the period, down 4.65% from a year earlier, and their operating cost totaled 3.07 trillion yuan, edging down 0.18% on year, it said.

The companies’ average sales profit margin stood at 3.1% during the six months, falling by 3.53 percentage points from a year earlier, said the association.

The falling profits came as steel prices declined significantly, while prices of steelmaking materials mostly rose.

According to the CISA, China’s steel price index stood at 122.52 by the end of June, falling by 8% from the previous month and sliding 14.6% from a year earlier, falling year over year for the third consecutive month.

The cost of fuel materials surged in the first half, with average purchasing prices of coking coal stood at 2,439.2 yuan per tonne, surging 76.6% from the same period last year and the average price of metallurgical coke stood at 3,212.4 yuan per tonne, rising by 29.2% from a year ago, according to the CISA.

Iron ore prices declined during the period, with domestic iron ore prices sliding 21.2% on year, while imported iron ore prices falling by 24.5%.

Looking ahead, the steel market may see some recovery, but steel prices and steel demand are unlikely to return to the high point seen at the start of the year, Hu Hong, deputy general manager of China’s largest steelmaker Baosteel, said at a recent industry event.

For a period ahead, the steel industry’s output will unlikely increase and as market demand gradually stabilizes, the steel market is expected to recover and profit in the sector may improve, said China Merchants Securities said in a note.