【EAF Steel】Turbulent Market Decline, EAFs in Dormant Stage

【EAF Steel】Turbulent Market Decline, EAFs in Dormant Stage

Under the combined effects of "weak expectations + harsh reality," China's domestic steel market was gripped by confusion and panic this week, leading to an accelerated decline in overall prices. As of August 15th, the average price of rebar was 3,115 CNY, a decrease of 142 CNY compared to the previous weekend. The prices of graphite electrodes for electric arc furnace (EAF) steelmaking have reached historically low levels, more details...

Raw Materials

This week, scrap steel prices quickly adjusted downward, with the average procurement price for EAF steel mills decreasing by 172 CNY to 2,234 CNY (excluding tax). Although the losses for EAF steel mills have continued to narrow, the fragile confidence in the current steel market and the incomplete adjustment of raw material prices have led many EAF steel mills to adopt a wait-and-see approach, potentially delaying the resumption of production.

As of August 15th, the capacity utilization rate of 135 EAF steel mills in China was 35.92%, down 2.43% from the previous week. EAF steel production stood at 230,600 tons per day, marking an 11th consecutive week of decline.

Market Overview

The macroeconomic data for July highlighted a significant "strong supply, weak demand" scenario. Downstream buyers of steel were hesitant to purchase as prices fell, and long-process steel mills were not decisively reducing production. Additionally, steel exports declined for the second consecutive month, and the expected boost from infrastructure investment may not materialize until September or October, further intensifying supply-demand tensions in the market.

Despite recent policy developments that have shown increased support for EAF steel, short-term prices for both steel and raw materials are likely to continue declining, with EAF steel production expected to gradually recover only by the end of August. 

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