【EAF Steel】Weak Demand for Long Products, Electric Arc Furnaces 

Entering a Period of Recuperation

This week, the overall supply and demand in Chinese domestic construction steel market are both weak. Many small and medium-sized blast furnaces and independent electric arc furnaces have suspended production. Coupled with the rise in the futures market, market prices have remained stable with a slight increase. Performance guidance for graphite electrodes used in electric furnace steelmaking. Traders' inventories are not high, and the market sentiment is relatively positive. As of January 25th, the average price of domestic rebar is 3982 RMB, an increase of 24 RMB compared to the end of last week.

On the raw material front, the price of domestic scrap steel has slightly increased this week. Long-process steel mills remain active in replenishing inventory. Although electric furnace steel mills have increased production stoppages for the Chinese New Year, most manufacturers will stockpile until early February. Additionally, some bases are accelerating destocking, and overall, steel mills' delivery conditions are still favorable.

This week, southern electric arc furnace steel mills successively announced production stoppage plans, with half of the manufacturers concentrating on suspending production in late January. The decline in the capacity utilization rate of electric arc furnace steel production continues to expand.

Recently, positive news in the steel market continues to emerge. Following the Ministry of Transport's clarification on moderately advancing railway infrastructure investment, policies such as the reserve requirement ratio reduction and support for high-quality real estate enterprises have also boosted market confidence to some extent. At the same time, the profit margins of electric arc furnace steel mills in the main production areas are still about 150 RMB higher than those of small and medium-sized long-process steel mills. Considering the overall low inventory pressure in the market, it is expected that electric arc furnace steel production will maintain a favorable situation after the Spring festival. For more analysis of the electric furnace steel market, feel free to contact us.