【EAF Steel】Profit Pressure Weighs on Production, EAF Mills Show Weaker Operating Momentum

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【EAF Steel】Profit Pressure Weighs on Production, EAF Mills Show Weaker Operating Momentum

As of April 21, the operating rate of 50 EAF steel mills mainly producing construction steel in China stood at 41.4%, down 0.6% from the previous period; capacity utilization rate was 42.5%, down 0.3% from the previous period; and the average daily output of construction steel was 94,700 tons, down 700 tons from the previous period.

During the survey period (April 14–April 21), four EAF mills in East China and Southwest China reduced operating hours, resulting in a 0.6% week-on-week decline in the national EAF operating rate. Although construction steel prices rose slightly this week, scrap prices increased more than finished steel, leading to a decline in EAF mill profitability. As a result, more enterprises have proactively shortened production hours.

Overall, some EAF mills are currently facing weak shipments and profit pressure, and production enthusiasm has weakened. Some mills still plan to further reduce operating hours next week, and the EAF operating rate is expected to continue declining.

During the survey period (April 14–April 21), four EAF mills in East China and Southwest China reduced operating hours, resulting in a 0.6% week-on-week decline in the national EAF operating rate. Although construction steel prices rose slightly this week, scrap prices increased more than finished steel, leading to a decline in EAF mill profitability. As a result, more enterprises have proactively shortened production hours.

Overall, some EAF mills are currently facing weak shipments and profit pressure, and production enthusiasm has weakened. Some mills still plan to further reduce operating hours next week, and the EAF operating rate is expected to continue declining.

The survey covers a sample of 50 domestic EAF steel mills mainly producing construction steel, with a capacity coverage rate of 78% in China.

The sample is adjusted based on new capacity additions and plant shutdowns, with corresponding updates to each mill's equipment and capacity.

Historical statistics have been compiled since April 2018. Data was collected monthly (8th–10th of each month) before June 2020, and weekly (every Tuesday) after June 2020.

The EAF operating rate is a point-in-time indicator, representing the ratio of actual production status reported by steel mills at the time of survey to their total capacity. For example:

If a steel mill normally produces 3,000 tons per day but reports 1,500 tons at the time of survey, the operating rate is 50%.

If a steel mill reports operating 12 hours per day, the operating rate is 12/24 = 50%.

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