【EAF Steel】Weak Supply and Demand in January, Shutdowns Expected During the Spring Festival

As the new year begins, the domestic construction steel market remains stable overall, with relatively weak downstream transactions. The market has entered another phase of inventory accumulation. As of January 2, the average price of rebar in China was ¥3,407, a decrease of ¥7 from last Friday.

On the raw material side, this week's scrap steel market saw slight price increases, with some steel mills continuing to raise prices to replenish stock. However, seasonal reductions in supply, combined with many traders having already consumed a large portion of their inventories, led to a slight decrease in actual deliveries to steel mills, providing some support to the scrap steel market.

This week, the cost for electric arc furnace (EAF) steel mills rose slightly, but the overall situation remains one of losses. Graphite electrodes serve as conduits for electrical energy within the EAF, where scrap steel is melted and refined to produce high-quality steel. The number of shutdowns at northern EAF mills is gradually increasing, while southern manufacturers are planning to begin their holidays around mid-January.

As of January 2, the capacity utilization rate of 135 EAF steel mills in China was 49.02%, a 1.01% decrease from last week, with daily EAF steel output at 306,800 tons, marking a continuous 10-week decline.

In January, the domestic steel market faces weak supply and demand. The market is expected to experience narrow fluctuations. Although the current valuation of the black metals market is relatively low, macroeconomic benefits will take time to materialize. In the second half of Q1, as funds gradually arrive, the domestic steel market's fundamentals are expected to improve, with EAF mills' profits and output gradually recovering. 

Feel free to contact us anytime for more information about the EAF steel market. Our team is dedicated to providing you with in-depth insights and customized assistance based on your needs. Whether you have questions about product specifications, market trends, or pricing, we are here to help.