【EAF Steel】Profit Narrows Slightly, Cost Advantage Continues

After New Year's Day, China's domestic construction steel prices have seen a slight increase, with a better atmosphere in the southern market compared to last week, while demand in the northern market continues to weaken. As of January 4th, the average price of domestic rebar is 4025 yuan, up 19 yuan from the previous weekend. 

In terms of raw materials, China's domestic scrap steel prices continued to rise this week. The average purchase price of scrap steel (electric arc furnace charge) increased by 24 yuan to 2674 yuan (without invoice) compared to last week. However, due to the impact of the holiday and the traditional off-season for supply, the growth in the arrival of scrap steel has been weak, and the arrival volume at some base areas has significantly decreased compared to last week. As the profit of electric arc furnace steel mills has continued to shrink for nearly half a month, coupled with the impact of regional coordinated production reduction, the output of electric arc furnace steel has decreased slightly for two consecutive weeks. Learn more about graphite electrodes used in electric furnace steelmaking.

The current scrap steel market has entered the winter storage stage, and the cost dividend of electric arc furnace steel mills has temporarily come to an end. However, as the price of iron ore reaches a new high again, the cost difference between scrap steel and pig iron is still more than 200 yuan, and small and medium-sized long-process steel mills in the mainland continue to intensify production cuts. electric arc furnace steel mills still maintain a dominant position.

Looking at the list of steel projects announced in some regions at the beginning of the year, there are still many electric arc furnace projects under construction. Some electric arc furnaces that were shut down last year have begun to resume production, and some shutdown periods even reached 1 year (such as the 100-ton electric arc furnace of Laigang Special Steel). In the later period, there is still considerable room for an increase in electric arc furnace steel production. For more analysis and prediction of the EAF steel market, feel free to contact us at any time.