【EAF Steel】Pressure on Exports, Development of EAF Steel Becomes a Key Priority

This week, domestic steel prices have shown slight fluctuations. While the futures market has slightly strengthened, the spot market remains cautious with a noticeable wait-and-see attitude. Rebar inventory has increased marginally. The price of graphite electrodes for electric furnace steel has fluctuated and risen. As of November 7th, the average price of rebar in China was 3524 CNY per ton, down 58 CNY from the previous week.

Regarding raw materials, scrap steel prices have fluctuated within a narrow range this week. The average procurement price for electric arc furnace (EAF) scrap material decreased by 11 CNY to 2303 CNY per ton (excluding tax), with a slight increase in delivery volumes. Due to relatively resilient scrap prices, the profitability of EAF steel mills has continued to narrow. In some regions, profits have shifted from positive to negative, and production pace has slowed. According to Xinluo Information, as of November 7th, the capacity utilization rate of 135 electric arc furnace steel mills in China was 57.43%, down 0.58% from the previous week. EAF steel production was 359,400 tons per day, continuing a two-week decline.

Following the conclusion of the U.S. presidential election, China's steel product exports are expected to face greater pressure, especially products like new energy vehicles, home appliances, and cranes, which indirectly impact Chinese steel exports. In the short term, there may be an acceleration in steel export volumes, but the medium to long-term outlook remains bearish. Short-term measures such as strong monetary policies or export incentives are not sustainable. The steel industry is likely to focus on capacity and quality upgrades. EAF steel has significant growth potential, and the recent establishment of the Electric Arc Furnace Steel Branch by the China Iron and Steel Association signals the increasing importance and attention being given to the development of EAF steel. 

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