【EAF Steel】 Real Estate Policies Boost Steel Market, 

Electric Furnace Profits Turn Positive Again

This week, the Chinese construction steel market showed a trend of initial decline followed by a rebound. In the first half of the week, influenced by a drop in futures prices, the spot market was largely in a wait-and-see mode, with prices mainly experiencing minor declines. After Thursday, the market saw a recovery due to frequent favorable policies for new energy vehicles in rural areas and real estate (such as reductions in personal housing provident fund loan interest rates and lower down payment loan ratios).

As of May 17, the average price of rebar in China was 3,741 yuan, down 9 yuan from last weekend.In terms of raw materials, scrap steel prices also saw a slight decline this week, with the average purchase price of electric arc furnace (EAF) scrap steel dropping 36 yuan to 2,456 yuan (excluding tax). Graphite electrodes are essential conductive materials for electric arc furnace steel production. Both steel mills and scrap yards saw an increase in deliveries. This week, the profits of EAF steel mills remained relatively stable, with more mills resuming production than undergoing maintenance, leading to a continued slow increase in EAF steel production.

According to statistics, as of May 16, the capacity utilization rate of 135 EAF steel mills in China was 57.75%, up 0.91% from the previous week, with daily EAF steel production reaching 355,200 tons. Although short-term steel prices do not yet have the conditions for a reversal, the overall environment is gradually improving. Policies promoting the replacement of old items with new ones continue to stimulate consumption in the automotive and home appliance sectors. Real estate acquisition and storage policies are expected to improve market expectations, and the shortfall in special bond issuance from January to April is likely to be accelerated. Steel demand is expected to improve steadily, with EAF steel mills maintaining stable operations in the short term and significant growth potential in the future. For more analysis & predictions on the future of EAF steel, pls continue to follow us.