【EAF Steel】Coke Weakness and Emission Reduction Strategies Put Pressure on EAF Steel

【Electric Arc Furnace Steel】 Coke Weakness and Emission Reduction 

Strategies Put Pressure on EAF Steel

Market Overview

This week, the domestic construction steel market continued to weaken. Overall downstream demand was average, and most merchants were primarily focused on shipments and cash returns, lacking confidence in the market outlook.

Key Data Points as of June 13:

• Average Domestic Rebar Price: 3628 RMB, down 45 RMB from last weekend.

• Scrap Steel: Due to varying weather conditions, the overall supply of domestic scrap steel tightened this week. Some steel mills temporarily raised prices for restocking at the beginning of the week but lowered prices in the latter half, reducing arrivals again. The average procurement price for scrap steel by domestic EAF steel mills was down 8 RMB from last weekend, at 2419 RMB (excluding tax).

• EAF Steel Mill Profitability: The decline in scrap steel prices was less than that of construction steel, increasing the loss margin for EAF steel mills and leading to a slight decrease in production. Maintenance activities increased slightly among manufacturers in South and Southwest China. High-conductivity graphite electrodes have become an indispensable material in electric arc furnace (EAF) steelmaking, enhancing the overall efficiency and cost-effectiveness of the process.

Capacity Utilization

• Utilization Rate: As of June 13, the capacity utilization rate of 135 EAF steel mills nationwide was 58.0%, down 1.06% from the previous period.

• Daily Output: EAF steel production was 356,800 tons/day.

Market Sentiment

The fundamental market sentiment for steel remains weak. Despite a slight recovery in real estate and infrastructure investments, actual demand feedback will likely take another 1-2 months. This week, Shandong, Jiangsu, and other regions have issued strict crude steel production control documents, but there is no clear mandate to increase the proportion of EAF steel, suggesting potential blanket cuts. Additionally, plans by coke producers to stabilize prices failed under the pressure from steel mills, further widening the price gap between scrap steel and molten iron, increasing cost pressures on EAF steel mills.

Outlook

In the short term, the production enthusiasm of domestic EAF steel mills may be somewhat restricted due to the above factors.

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