【Electric Arc Furnace Steel】A Turnaround in July?

This week, the decline in the domestic construction steel market has widened, with downstream buyers adopting a more cautious stance. Combined with the impact of rainy weather, overall market transactions remain weak. As of June 27th, the average price of rebar in China is 3,533 RMB, down 83 RMB from last weekend.

On the raw material side, scrap steel has shown some resistance to price drops after entering the off-season. This week, the average purchase price of scrap by electric arc furnace (EAF) steel mills decreased by 31 RMB to 2,386 RMB (excluding tax), a decline that is significantly less than that of steel products. This has further expanded the losses of EAF steel mills, with more production cuts in the southern region. High-conductivity graphite electrodes have become an indispensable material in EAF steelmaking, enhancing the overall efficiency and cost-effectiveness of the process.

As of June 27th, the capacity utilization rate of 135 EAF steel mills in China is 56.91%, down 0.61% from the previous week. The daily output of EAF steel is 353,400 tons, marking a continuous decline for four weeks.

The steel market has now entered the off-season for consumption, with factory and social inventories continuing to rise. Although there are reports of production controls in regions such as Shandong, Fujian, and Jiangsu, it is expected to take a long time before these measures are implemented. The market is still waiting for clearer macroeconomic signals, such as the Third Plenary Session of the Central Committee in July. Under these circumstances, it is anticipated that the domestic EAF steel market will continue to operate weakly in the first half of July.

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