Utilization of China’s blast furnace capacity continues to grow

Blast furnace capacity utilization among 247 Chinese steelmakers averaged 89.76% on June 14-20, up 0.23 percentage points from the previous week, according to Mysteel. Thus, the indicator has again updated a seven-month high.

Daily pig iron production for the week increased by 6.3 thousand tons per day, or 0.26%, to 2.4 million tons per day.

More and more steel mills are returning blast furnaces to operation after maintenance amid some recovery in steel margins. The profits of Chinese blast furnace producers increased slightly due to the continued decline in raw material prices.

As of June 20, about 52% of the 247 steel producers surveyed by Mysteel could make some profit from sales of steel products, which is about 3 percentage points higher than the previous week.

Along with the increase in pig iron production during June 14-20, the daily consumption of imported iron ore at 247 Chinese steel mills increased by 11 thousand tons per day, or 0.4% over the week, to reach 2.94 million tons per day.

However, the mills are still cautious about further production increases, as they have seen weak steel consumption among end users, so their demand for raw materials is low.

As of June 20, the total stocks of imported iron ore stored at these enterprises amounted to 92.1 million tons, down 0.4% over the week. These stocks will last for 31.3 days at the current level of utilization.

As a reminder, Chinese provinces are discussing targets to reduce steel production, with Fujian already announcing a 3.5 million tonne cut in 2024. The introduction of stricter regulations is aimed at reducing energy consumption and carbon emissions.

As GMK Center reported earlier, Chinese steel companies reduced steel production by 1.4% y/y – to 438.61 million tons in January-May 2024. Analysts expect steel production in China to decline by 1.1% y/y in 2024.