【EAF Steel】 The Market Faces Challenges With Growing Losses

After a brief weak rebound, China domestic prices of construction steel experienced another decline this week. Overall downstream demand remains weak, and traders have a noticeably pessimistic outlook. Some markets have witnessed an increase in inventory levels. Get the specifications of high power graphite electrode for EAF steelmaking. As of May 25th, the average price of rebar steel in China stood at 3,616 yuan, a decrease of 121 yuan compared to the previous week.

Regarding raw materials, influenced by the sharp decline in steel prices, some scrap steel enterprises shifted from a wait-and-see attitude to actively selling their stocks. The overall delivery volume to steel mills increased compared to the previous week, while the average purchase price of scrap steel (used in electric arc furnaces) decreased by 91 yuan to 2,404 yuan.

Due to the recent widespread reduction in production by scrap steel enterprises, the decrease in scrap steel prices was not as significant as that of rebar steel. Consequently, the losses for EAF steel mills have further expanded, leading to an increase in production shutdowns and output restrictions in the Central-South, Southwest, and North China regions. According to statistics, the capacity utilization rate of EAF steel production across 135 steel mills in China this week was 38.38%, a decrease of 1.25% compared to the previous week. The daily production of EAF steel amounted to 216,100 tons, marking a continuous decline for the past nine weeks.

Although the current price of rebar steel is approaching the starting point of the price surge observed since 2020, the profit level for long-process steel mills is less than half of what it was back then. Consequently, there is still downward pressure on the prices of iron ore and coking coal, and the impact of cost collapse is expected to persist. With weak overseas demand and no policy stimulus, it is projected that the core focus of rebar steel prices still has a downward potential of around 200 yuan. Active production reduction in long-process steel mills is unlikely to occur until at least June, while short-term production levels of EAF steel mills are expected to remain low.  Contact us for more information on the EAF steel market.