China's steel industry is experiencing a continued slowdown, with domain capacity utilization falling for the second consecutive week. According to data from Mysteel, the average utilization rate among 247 Chinese steel producers dropped to 89.08% for the week of June 28 - July 4, 2024, a decrease of 0.05 percentage points from the previous week.
This decline is attributed to weakening demand, prompting more steel plants to initiate furnace maintenance. Daily pig iron production decreased by 1,200 tons to 2.39 million tons per day, a slower rate of decline compared to the previous week's 5,000-ton drop.
Despite the overall reduction in steel production, inventories of the five main types of carbon steel in Chinese traders' warehouses have increased for the fifth straight week. This buildup suggests a significant mismatch between supply and demand in the market.
The slowdown is also affecting raw material consumption, with the daily use of imported iron ore falling to an average of 2.9 million tons per day. However, total reserves of imported iron ore at these enterprises have increased by 0.8% to 92.1 million tons, sufficient for 31.4 days at current usage rates.
A slight rebound in steel prices has allowed some mills to regain profitability, with about 45% of the surveyed steel producers reporting profits from metal product sales, up 2 percentage points from the previous week.
This trend aligns with the broader picture of China's steel industry in 2024, which saw a 1.4% decrease in steel production during the first five months of the year compared to the same period in 2023.