Platts: 35% of the steel mills in China have cut output due to problems with the supply of raw materials
a Survey conducted by the Agency S&P Global Platts found that 35% of the steel mills in China have reduced the production volumes of steel or plan to do so, while 23% said they still worked fine. In addition, some plants wanted to move on earlier service their facilities is an indirect way of reducing production - but are unable to do so due to the lack of jobs and components.
More than a third of respondents reported problems with the supply of raw materials, although half of the respondents indicated that there were no problems. In China there were some logistical constraints due to the coronavirus, and the most affected plants, which use trucks for transportation of raw materials from the ports.
"we Have difficulties with the delivery of raw materials from the port to the plant. Our reserves of raw materials is insufficient; for some brands it's only 2-3 days, but for some other brands it higher", - quotes Agency the employee of the purchasing Department.
Nearly 40% of respondents stated that the increase in stocks of steel represents the biggest problem in the market, and 27% said the lack of demand for processing.
About 22% of survey participants expected the margin of hot-rolled coil will average only 50 RMB - 100 RMB (approximately 7-14 USD) per tonne in the first quarter; 15% believe that margins may fall to the level of break-even.
survey respondents remained generally optimistic about iron ore prices, with 50% expected that the ore content of 62% iron (IODEX) will cost an average of 80-85 dollars per ton CFR China in January-March. About 10% believe that iron ore prices will be above $ 85 per ton.
About 31% of said iron ore of higher grade (65% Fe) will be most influenced by current market conditions due to the fact that the mill will gravitate toward material with lower content to offset falling margins in the steel mill and the reduction in steel production.
Previously coalsalesthat in connection with the epidemic of coronavirus in China sharply reduced inventories of raw materials for metallurgical plants. At the same time, growing stocks of unsold metal products due to logistical problems.