Traditional peak season, steel production resumption is still limited by profit contraction

In September, China's steel market entered the traditional peak demand season. Due to the strong expectation of demand recovery in the peak season, steel plants' enthusiasm to resume production has gradually increased. Graphite electrodes for steelmaking have good physical and chemical properties and are widely praised by electric arc furnace plants.

 Judging from the current blast furnace operating rate changes, the production release intensity of iron and steel enterprises continues to rise. Data shows that in the first three weeks of September 2022, the average blast furnace operation rate of 100 small and medium-sized steel enterprises in China is 79.9%, up 3.1 percentage points from August.

In the face of a complex and severe international environment, as well as multiple unexpected challenges such as frequent outbreaks and extreme heat in China, all regions and departments effectively coordinated epidemic prevention and control, economic and social development, strengthened the implementation of a series of policies and measures to stabilize the economy, accelerated the release of policy effectiveness, and sustained the recovery of the national economy. From the perspective of demand, the downstream demand of the steel market is gradually improving, the automobile industry is stable, the machinery industry is warming up, the real estate industry is still under pressure, and infrastructure investment is accelerating. Despite the impact of various factors exceeding expectations, the national economy continued to recover its development trend, and major indicators showed positive changes. However, it should also be noted that the international environment is still complex and severe, and the foundation for domestic economic recovery is still not solid. Therefore, we must adhere to the general principle of seeking progress while maintaining stability, effectively coordinate epidemic prevention and control with economic and social development, pay close attention to the effective implementation of a package of policies and measures to stabilize the economy and follow-up policies, focus on expanding effective demand, pay attention to stabilizing employment and prices, consolidate the foundation of economic recovery, and maintain the economic operation within a reasonable range.

From the supply side, due to the strong expectation of terminal demand warming in the peak season, steel plants' enthusiasm to resume production has also been significantly enhanced. In order to cope with the double release of construction steel demand and industrial steel demand at construction sites before the end of the year, steel plants will also maintain a certain amount of capacity release. At the same time, due to the high cost of short process steel plants, the capacity release of electric furnace steel will be greatly limited. At present, due to the gradual deepening of the traditional steel market peak season, the expected recovery of terminal demand, the expected recovery of terminal demand, the gradual expansion of inventory demand, and the shrinkage of profits, the process of steel plants to resume production will be restricted. The domestic steel output will show a trend of pressure recovery in September. For more steel market reports, please feel free to contact us.