EAF steel: long products performance is flat, production recovery is less than expected

China's construction steel market fluctuated slightly this week. Some construction sites in the north also began to gradually resume work, downstream transaction slightly improved. However, with the resumption of production of EAF (electric furnace steel) plants and the increase of market inventory, graphite electrodes are increasingly used in smelting electric furnaces, some manufacturers still focus on increasing shipments to eliminate financial pressure. As of February 10, the average price of deformed steel bars in China was 4173 yuan, down 34 yuan from last Friday. 

In terms of raw materials, the scrap steel market was mixed this week. Some EAF steel plants that have just resumed production have raised their prices to replenish inventories, while some steel plants that resumed production at the end of January have seen a slight drop in prices. The average purchase price of scrap steel (electric furnace material) in steel plants decreased by 6 yuan to 2826 yuan. This week, the number of EAF steel plants resuming production increased significantly. However, the overall profit level was again lowered by the steel price, and the downstream demand was still recovering slowly. The actual production time was mostly controlled at 8-12 hours, and the output recovery was not obvious. According to statistics, the EAF steel capacity utilization rate of China's 135 steel plants was 31.46% this week, an increase of 8.94% over the previous week, and the EAF steel output  was 176600 tons/day.

In the short term, the resumption of downstream production has improved, the epidemic prevention and control is significantly better than expected.  Steel market demand is expected to gradually recover. In addition, the social finance data in January has improved, and most traders have a good attitude to enter the market. However, the steel market is still in a state of overstock, and many EAFs resumed production after the middle of February. In the short term, the market is expected to continue to operate with narrow shocks. For more information about electric furnace production and operation, feel free to contact us.