Chinese steelmakers' profitability deteriorates in Jun'26

- Sharp $26/t rise in met coke costs offsets $8/t drop in iron ore prices

- Rebar losses stand at $11/t, HRCs at $4/t; only heavy plates profitable

SteelDaily: Chinese steelmakers’ profitability deteriorated sharply in June as production costs increased, while steel prices continued to weaken.

By the end of June, the production costs of key steel products at 91 major Chinese steelmakers had risen by RMB 30-39/t ($5-6/t) m-o-m. The average production cost of rebar increased by RMB 37/t ($6/t) to RMB 3,117/t ($468/t), hot-rolled coil (HRC) rose by RMB 39/t ($6/t) to RMB 3,291/t ($494/t), and heavy plate increased by RMB 30/t ($5/t) to RMB 3,295/t ($494/t).

The rise in production costs was mainly driven by higher raw material prices. Although the average price of 62% Fe iron ore fell by $8/t m-o-m to $102/t in June, the average price of second-grade metallurgical coke in North China increased by RMB 172/t ($26/t) to RMB 1,698/t ($255/t). Meanwhile, the average selling price of rebar in Tangshan declined by RMB 61/t ($9/t) m-o-m to RMB 3,033/t ($455/t), further squeezing margins.

As a result, both rebar and HRC slipped into loss-making territory. The average operating margin for rebar fell by RMB 109/t ($16/t) m-o-m to a loss of RMB 71/t ($11/t), while HRC recorded an average operating loss of RMB 26/t ($4/t), down RMB 159/t ($24/t) from the previous month. Heavy plate remained profitable at RMB 43/t ($6/t), but its profit declined by RMB 175/t ($26/t) m-o-m, indicating a significant deterioration in profitability.

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