【EAF Steel】Slight Profit Narrowing, Cost Advantage Continues

After New Year's Day, the domestic construction steel market prices slightly rose, with the southern market's transaction atmosphere being better than last week, while the demand in the northern market continued to weaken. As of January 4th, the average price of domestic rebar was 4,025 yuan, an increase of 19 yuan from the previous weekend. 

In terms of raw materials, this week saw a continued rise in domestic scrap steel prices, with the average purchase price of scrap steel (for electric arc furnace) increasing by 24 yuan to 2,674 yuan (excluding tax) compared to last week. Learn more about graphite electrode products for electric furnace steel.However, due to the holiday and the traditional off-season for supply, the arrival volume of scrap steel showed little growth, and the arrival volume at some bases significantly reduced compared to last week. As electric arc furnace steel mills have seen a continued narrowing of profits for nearly half a month, compounded by the effects of regional production cuts, the production of electric arc furnace steel has slightly fallen for two consecutive weeks.

The current scrap steel market has entered the winter storage phase, and the cost advantage for electric arc furnace steel mills has temporarily come to an end. However, as iron ore prices hit new highs, the cost gap between scrap steel and molten iron remains inverted by more than 200 yuan. Small and medium-sized long-process steel mills in the mainland continue to intensify their production cuts, with electric arc furnace steel mills still maintaining a dominant position.

From 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, and some electric arc furnaces that were shut down last year have begun to resume production, with some having been out of production for up to a year (such as Laigang Special Steel's 100-ton electric arc furnace). There is still significant room for an increase in electric arc furnace steel production in the future. Feel free to contact us for further analysis of the future market of electric furnace steel.