EAF Steel 

Weak Supply and Demand for Electric Furnace Steel, 

Challenging Recovery from Losses

This week, domestic construction steel prices mainly experienced slight fluctuations. The hot weather has affected construction on some market sites, and many businesses are under pressure to recover funds by the end of the month, resulting in insufficient momentum for a market rebound. Graphite electrodes are supplied for steelmaking in short process electric furnaces. As of June 1st, the average price of domestic rebar steel was 3,612 yuan, a decrease of 2 yuan compared to last Friday. 

In terms of raw materials, due to the reduction in production or market observation by many scrap steel enterprises recently, combined with the impact of high temperatures, the overall supply of scrap steel has decreased this week. Some steel mills have been forced to raise prices slightly and replenish their inventories. The average purchase price of scrap steel (for electric furnace feedstock) in steel mills has increased by 5 yuan to 2,409 yuan compared to last week.

Due to the overall performance of the scrap steel market continuing to be stronger than rebar steel, the average loss for electric furnace steel mills has further widened. The average loss is close to 200 yuan, and the extent of production suspension by manufacturers in the southern region has increased. In the North China region, there has also been an increase in production restrictions by manufacturers. According to statistics, the capacity utilization rate of electric furnace steel in 135 steel mills nationwide this week was 36.26%, a decrease of 2.1% compared to last week. The daily output of electric furnace steel is 204,200 tons, which has been declining for 10 consecutive weeks.

Recent economic data performance remains poor, with a slowdown in infrastructure growth and slow recovery in the real estate sector. The continuous decline in iron ore and coke prices has allowed many long-process steel mills to maintain a certain level of profit margin. The extent of voluntary production cuts is limited. The steel market continues to show weak supply and demand with a downward shift in focus. The pressure to reduce production is mainly on electric furnaces. Combined with the onset of the off-season for scrap steel recycling and expectations of power restrictions, it is expected that domestic electric furnace production will continue to decline in June. Contact us to obtain information on the future market of electric furnace steel.