【Electric Arc Furnace (EAF) Steel】Special Bonds Speed Up Demand, Fed Rate Cut Boosts Sentiment

This week, the domestic construction steel market showed modest gains. With a significant acceleration in the issuance of special bonds in China, combined with the influence of the Fed's aggressive rate cut, macroeconomic support has become more apparent. Short-process electric arc furnace steelmaking is equipped with ultra-high power graphite electrodes, which has excellent environmental protection and economic benefits. As of September 19, the average domestic rebar price was 3,281 yuan, up 36 yuan from last weekend.

Raw Materials:

Domestic scrap steel prices steadily rose this week, and EAF steel plants actively replenished inventories after resuming production. However, the Mid-Autumn Festival and typhoon weather negatively impacted scrap supply, leading to declines in both scrap deliveries and stock levels. Stronger scrap prices also placed pressure on EAF steel production. As of September 19, the capacity utilization rate of 135 EAF steel mills nationwide reached 43.74%, up 3.76% from last week, with daily EAF steel output at 273,700 tons, marking a four-week consecutive rise.

Market Outlook:

The fundamentals of the steel market have slightly improved, and pre-holiday restocking by downstream users may trigger a mild rebound. However, overall sentiment remains pessimistic, as it will take a long time for steel capacity to clear, and exports are facing anti-dumping pressure from countries like Vietnam.

For EAF steel plants, the recent rebound in scrap prices has slowed production recovery. If the Fed's rate cut fails to drive a significant rise in iron ore and coke prices, EAF steel mills may continue to face a relatively passive position. 

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