【Electric Arc Furnace Steel】Steady Adjustment with a Cautious Approach
【Electric Arc Furnace Steel】Steady Adjustment with a Cautious Approach
Due to recent macroeconomic policies falling short of expectations, the domestic steel market has returned to a more rational state this week, with a decline in downstream inquiries and increased profit-taking among traders. As of October 17th, the average price of rebar in China stood at 3,645 RMB, down 146 RMB from last weekend. The demand for graphite electrodes for electric furnace steelmaking is constantly increasing.
Raw Material Market: This week, scrap steel prices have also gradually decreased. Some steel mills that had previously purchased large quantities have suspended procurement, adopting a wait-and-see approach, leading to mixed market quotes. Learn about graphite electrodes, a kind of conductor that melts iron scrap in electric arc furnaces. The average procurement price of scrap steel by mills has dropped by 62 RMB from last week, down to 2,269 RMB (excluding tax).
Given the current high price difference between scrap and rebar, some scrap traders are reluctant to sell and are holding out for higher prices. As a result, the actual volume of scrap received by steel mills has seen limited growth, creating a standoff between supply and demand. Electric arc furnace (EAF) steel mill margins have continued to narrow compared to last week. Combined with concerns over production control and construction material demand, the rate of production increase has slightly slowed.
Production Data: As of October 17th, the capacity utilization rate among 135 EAF steel mills in China was 54.94%, an increase of 2.99% from last week. EAF steel production reached 343,800 tons per day, marking an eighth consecutive week of growth. In the short term, the steel market still needs time to absorb the previous period's overexcitement. However, given that both steel prices and inventories remain at relatively low levels, and with anticipated favorable policies gradually coming into effect, it is expected that the adjustment in steel prices will be moderate. EAF steel mills are likely to maintain a certain level of profitability in the near term.
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