【EAF Steel】Blast furnace losses continue to widen, while EAF production yields marginal profits

This week, China domestic construction steel market experienced slight fluctuations with a modest uptrend early in the week followed by some weakening in the latter half. Market demand has not shown significant improvement, leading to reduced confidence among some traders. As of September 8th, the average price of domestic rebar steel was 3,760 yuan, a decrease of 1 yuan compared to the previous weekend, and the market trends for Artificial Graphite Electrodes in Early September. 

On the raw materials front, sturdy prices for iron ore and coke provided support. This week, the scrap steel market mainly saw minor fluctuations, with the average purchase price for steel mill scrap (electric furnace materials) increasing by 8 yuan to 2,559 yuan (excluding taxes) compared to the previous week. In the Guangdong and Fujian regions, steel mills experienced limited growth in overall delivery due to the impact of typhoon weather. Profits for electric furnace steel mills increased slightly this week but still averaged around a loss of 150 yuan. The recovery in electric furnace steel production remained limited. According to statistics, as of September 7th, the capacity utilization rate of 135 electric furnace steel mills nationwide was 34.0%, with a month-on-month increase of 0.99%, and electric furnace steel production reached 201,400 tons/day.

With the weakening of seasonal factors, the overall environment in the domestic steel market is improving. Industries such as automotive manufacturing will continue to exert their strength, infrastructure construction will enter an accelerated phase, and the real estate sector is expected to rebound under a series of policy stimuli. Additionally, under the guidance of declining profits and policies to control crude steel production, some small and medium-sized long-process steel mills in mainland China have shown signs of reducing production. This will alleviate supply pressure in the steel market, coupled with the trend of strong iron ore and coke costs. It is expected that domestic construction steel prices will rebound in September, and electric furnace steel production is expected to increase slightly. Any inquiries of EAF steel market information, feel free to contact us.