【EAF Steel】Returns to Losses, Increased Production Halts in Northwest China

This week, China's steel prices fluctuated slightly, with overall transactions weaker than last week. Low-priced resources have increased in the market, and most traders remain cautious. Some steel mills have also reduced shipments and offered discounts. As of November 14, the average price of rebar in China was RMB 3,448, down by RMB 76 compared to the end of last week. Graphite electrodes have a wide range of applications, primarily used in electric arc furnace steelmaking, submerged arc furnace ferroalloy production, and other high-temperature electrolysis processes.

In terms of raw materials, the scrap steel market experienced weak fluctuations this week. The average purchase price of EAF scrap by steel mills dropped RMB 22 to RMB 2,281/ton (excluding tax) compared to last week. Amid insufficient confidence in the future market, scrapyard shipments have become more active, leading to increased arrivals at steel mills.

Recently, the decline in scrap steel prices has lagged behind that of finished steel, causing EAF steel to return to losses for the first time in nearly two months. Steel mills in northern regions have intensified production cuts. As of November 14, the capacity utilization rate of 135 EAF steel mills nationwide was 56.58%, down 0.86% from last week. Daily EAF steel production reached 354,100 tons, marking three consecutive weeks of decline.

With colder weather setting in across northern China, demand in the construction steel market is expected to weaken further after late November. In addition, some manufacturers in southern regions will face year-end production control pressures. Coupled with the ongoing decline in overall profitability of steel mills, EAF steel production is anticipated to continue a slight downward trend in the near term. 

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