【EAF Steel】Blast Furnace Facing Huge Losses, 

Electric Arc Furnaces Enjoying Dividends

This week, China domestic construction steel prices continued to plummet, with downstream user demand gradually recovering. The market transaction atmosphere slightly improved compared to last week. The main reason for the price decline is the significant drop in petroleum coke prices, which dragged down steel prices. 

As of March 14th, the average price of rebar in China was 3633 yuan, down by 172 yuan from the previous week. Regarding raw materials, this week, domestic scrap steel prices accelerated their decline, with the average purchase price of steel mills adjusted downward by 134 yuan to 2454 yuan (excluding taxes). Both the arrival volume and consumption volume increased. The profit of electric arc furnace steel mills changed little compared to last week. Many electric arc furnaces in East China and Central South China have resumed production, and the utilization rate of electric arc furnace steel production capacity continues to rise, approaching 50%. Electric arc furnace steelmaking uses graphite electrodes, with specifications available for reference. Due to the rapid decline in steel prices in recent weeks, long-process steel mills have suffered severe losses. Some manufacturers with high previous raw material inventories have suffered losses of over 300 yuan, leading to a significant increase in voluntary production cuts. At the same time, some local steel associations (such as Guangdong, Yunnan, Fujian, Shandong, etc.) have also requested or advocated local steel mills to actively reduce production to support prices, and social inventories have begun to decline. Compared with that, steel mills in the main electric arc furnace production areas are mostly in a state of balanced or slightly negative profits, with no intention of reducing production for the time being.

With the further warming of steel market demand in the second half of the month, coupled with the gradual realization of the positive signals conveyed by the government work report (such as stimulating demand), it is expected that steel prices will gradually stabilize and rebound, and the production situation of electric arc furnace steel mills will continue to improve. Steel market production capacity and market analysis, follow us for continuous understanding.