Steel processing plants continued to reduce production against the background of a decrease in market activity

Blast furnace capacity utilization among 247 Chinese steelmakers fell to 81.59% between December 29 and January 4, reaching its lowest level in 15 months. This was reported by Mysteel Global.

This was the 10th consecutive week of decline. Steel mills in the north of the country further cut production amid cooling market activity. However, some steel mills in the eastern Chinese provinces of Jiangsu and Shandong, which had previously suspended production for an annual overhaul, have completed work and returned their facilities to service.

During the period, daily pig iron production at 247 steel mills fell to 2.18 million tons per day, down 1.4% from the previous week,

Steel trade in northern China remained sluggish in late 2023 and early January 2024. Most construction sites in the region reduced outdoor work hours due to the cold winter weather, which affected the sentiment of steelmakers.

As a result, consumption of imported iron ore by steelmakers monitored by Mysteel fell by 1.3% week-on-week to 2.66 million tonnes per day between December 29 and January 4.

Despite the fact that the current demand for ore from Chinese enterprises is declining, the demand for winter replenishment of raw materials has increased. Metallurgists are seeking to build up sufficient stocks to last through the Chinese New Year.

As a result, the total stocks of imported ore stored at 247 plants increased by 2.7% as of January 4 – to 97.86 million tons compared to the previous week. These volumes should be enough for 36.8 days of use at the current consumption level.

As GMK Center reported earlier, at the end of 2022, the Chinese steel mills accelerated replenishment of winter scrap stocks against the background of reduced supplies. The slowdown in scrap purchases by the steel industry gradually gave way to increased activity, as factories sought to ensure sufficient raw materials for production during the winter, market dynamics remained favorable.