Daily hot iron production in China has decreased to 2.3882 million tons, which shows a decline of 6,100 tons compared to last week. The operating rate of blast furnaces during this period has reached 88.57 percent, and the capacity utilization rate has reached 88.15 percent. This production decrease clearly indicates a contraction in demand in the market, and it seems that this trend is accelerating.
Market Trend Analysis
According to available data, the trend of hot iron production has gradually decreased from a peak of 2.4080 million tons on September 2 to 2.3882 million tons. This production decrease includes four consecutive weeks, totaling a reduction of 19,800 tons from the peak production. Among these declines, the three most recent drops were 3,700, 4,800, and 6,100 tons, respectively. This situation indicates a lack of improvement in demand and an acceleration of contraction in this sector.
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Economic Consequences and Forecasts
Steel companies, due to being unprofitable, will prepare maintenance plans in early October, which could lead to a significant reduction in hot iron production. It is expected that the losses from repairs next week will reach 1.6839 million tons, which means an increase of 55,100 tons compared to the previous week. The first production report after the holidays could show the largest decline in this cycle.
The profit rate for imported iron ore has similarly been affected by these changes. The average loss from imported iron ore has increased from 5.08 to 6.12 yuan per ton, and this trend is expected to continue. Despite these conditions, some signs indicate an improvement in market conditions. The capacity utilization rate of coke ovens has increased to 75.0 percent this week, which is considered a practical prerequisite for price reductions.
Overall, it seems that given the current market situation, the first week of October will be influenced by two major factors: the actual size of the reduction in hot iron production and the success or failure in reducing coke prices.
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