【EAF Steel】Flat Start after the Holiday, Situation Better than Last Year

After the holiday, Chinese domestic construction steel market demand performed poorly, with the average labor force rate at construction sites around 20%, coupled with the impact of rain and snow weather in some areas, the overall market transactions were weak, and the futures market's adjustment also caused some disturbance to market sentiment. The graphite electrode is widely used in EAF steelmaking. As of February 22, the average price of domestic rebar was 3,944 yuan, a decrease of 19 yuan compared to before the holiday.

In terms of raw materials, after the holiday, domestic scrap steel prices first rose then suppressed, with most suppliers not yet returning to the market, and the effect of long-process steel mills raising prices to replenish inventory was not obvious, with the average price of scrap steel falling by 10 yuan compared to before the holiday, slightly narrowing the profit margin for electric furnace steel mills.

Due to the volume of scrap steel supply and the recovery of downstream demand both occurring after the 15th day of the first lunar month, the number of domestic electric furnace steel mills resuming production this week was also relatively limited, with most factories focusing on resuming production between February 26 and March 1. Some electric furnace steel mills in Sichuan, due to the rapid decline in profits recently, have postponed their resumption of production by 3-7 days. According to statistics, as of February 22, the capacity utilization rate of 135 electric furnace steel mills in China was 22.25%, an increase of 3.05% from the previous period, with electric furnace steel production reaching 131,700 tons/day.

In the past two months, domestic steel export orders have remained strong, and the rate of steel inventory accumulation after the holiday is slower than the same period last year. The overall tone of real estate and infrastructure policies continues to improve, and the demand for steel in the market is expected to gradually rebound. Although the profit advantage of electric furnace steel mills continues to narrow, it is significantly better than in the first half of last year, and production is expected to perform well. Any inquiries of graphite electrodes, feel free to contact us.