Mysteel: China's carburant demand rose in December, while pre-holiday stock is low

Looking back at the steel market in December, as of December 30, the construction steel price index had risen by 1.58 percentage points, which is rebounding. By the end of December, steel price had soared to a new four quarter high, but the sales volume was very low. Before the Spring Festival, steel spot market pressure is increasing day by day. From the perspective of China's local blast furnaces and electric furnaces in December, obtain guidance on graphite electrode products for electric arc furnace steelmaking, the operation rate and profit decreased, especially the electric furnace steel. The prices of coking coal, coke and scrap steel are still high. From the steel profit in December, the loss of finished steel is difficult to change, which is unfavorable to the procurement support of auxiliary materials. In order to save costs, steel plants reduce inventory and look for alternatives. 

According to Mysteel's research, China's 115 local steel plants have analyzed carburant bidding situation. In December, the bidding volume was 59753 tons, an increase of 53.78% month on month. The growth rate of East China, South China and Southwest China was obvious, with the growth rate of 166.98% in East China, 200.00% in South China and 139.39% in Southwest China. From North China, East China and Central China, the bidding volume in December was 45340 tons, with a month-on-month increase of 266.80%. In December, China's local 115 steel plants'  carburant purchase volume was 38,060 tons, a month-on-month increase of 28.31%; Graphitized carburant purchase volume was 16900 tons, a month-on-month increase of 247.02%, other carburants' bidding volume was 4593 tons, a month-on-month increase of 6.25%, among them the graphitization carburant bidding volume showed an obvious increment compared with November.

Looking at the whole carburant market, the demand in December rose significantly compared with that in November, mainly due to:

(1) Quarterly purchase. In the first quarter, some steel plants began to purchase on a quarterly basis, which led to a substantial increase in procurement in some regions;

(2) Prepare goods before holidays. The Spring Festival comes in the middle and late January, and most steel plants start the Spring Festival stocking mode. From the purchase growth rate, the steel plants purchased from January to February are far lower than the same period of previous years, and most of them are expected to continue purchasing at the end of January.

Purchase expectation in January: Some steel plants have maintenance plans in January and February. According to Mysteel's statistics, 18 blast furnaces are planned to resume production in January, involving a capacity of about 79000 tons/day; There are 12 blast furnaces planned to be shut down for maintenance, involving a production capacity of about 33000 tons/day. Therefore, according to the statistical data, molten iron production tends to upward, and the overall demand is still expected to rise. However, considering that some steel plants have already stocked up in two months and the quarterly procurement is completed, carburant market demand in January is expected to be decline, while it will be lower than the same period last year. Welcome to contact us for further analysis of the carburant market.