【EAF】Losses and Standard Changes Lead to Increased Production Cuts

【EAF】Losses and Standard Changes Lead to Increased Production Cuts

This week, Chinese domestic construction steel prices have seen a slowdown in their decline. Some long product companies have proactively increased production cuts to address the transition between old and new rebar standards. Consequently, prices for new standard resources have risen by 20-30 yuan, providing short-term market support. As of August 1, the average price for domestic rebar is 3295 yuan, down 43 yuan from the previous weekend.

In terms of raw materials, scrap steel prices continued to fall this week. The average purchase price for electric arc furnace steel mills dropped by 62 yuan to 2246 yuan/ton (excluding tax), with a noticeable decline in steel mill deliveries. Graphite Electrode is widely applied in electric arc furnaces (EAF) for steelmaking and other high-temperature processes.

As of August 1, the capacity utilization rate for 135 electric arc furnace steel mills nationwide stands at 42.0%, a decrease of 5.37% from the previous month. Daily production is 26.21 million tons, marking nine consecutive weeks of decline.

Although recent real estate data shows marginal improvement, it remains weak. The automotive and home appliance sectors have continued to struggle since June, and whether infrastructure can boost recovery is critical for future market trends. On July 30, the Central Politburo emphasized accelerating the issuance and utilization of special bonds and long-term treasury bonds to support major national strategies and key areas. The implementation of these policies is expected to stimulate steel demand in the latter half of the third quarter. Additionally, due to ongoing losses and the transition between old and new rebar standards, many electric arc furnace steel mills have started maintenance shutdowns since late July for about half a month, which should alleviate market inventory pressures. Chinese domestic steel prices are expected to stabilize and gradually recover in August.

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