The capacity utilization rate of the 71 independent electric-arc-furnace (EAF) steelmakers across China under Mysteel’s regular survey rose for a sixth week last week, climbing by another 1.61 percentage points on week to 72.16% as of April 1 – a new record high since Mysteel launched the survey in May 2020. Heathier profit margins persuaded more EAF mills to ramp up production, the survey found.
“The recent surge in domestic finished steel prices widened the price spread between rebar and steel scrap and improved the EAF producers’ profits. This encouraged more steel mills to step up output,” a Shanghai-based market analyst explained.
As of April 6, Mysteel’s steel scrap price index had gained some Yuan 23.8/tonne ($3.8/t) on week to reach Yuan 3,272/t, while on the same day, Mysteel’s national average price for HRB 400E 20mm dia rebar had also increased by a larger Yuan 206/t on week to refresh its 9.5-year high of Yuan 5,117/t, both including the 13% VAT.
Consequently, the price spread between rebar and scrap had expanded to Yuan 1,855.69/t, higher by Yuan 180/t on week, according to Mysteel’s database.
“Moreover, some EAF mills have sufficient stocks at hand, thanks to scrap traders’ fast pace of delivering scrap to mills over the past several days,” the Shanghai analyst noted. “This allowed many mills to operate their EAFs at full capacity,” she added.
An official with an EAF mill in East China’s Jiangsu province agreed, saying “Our profit margins of producing rebar, for example, have reached to around Yuan 530/t, which is very profitable.”
However, he also warned that though his mill still had ample scrap stocks at hand, daily scrap consumption at the works has outpaced average daily delivery volumes. The company is now considering raising its scrap procurement prices to secure more scrap while prices are reasonable – just in case scrap prices make another jump in the coming week.
Written by Lindsey Liu, liulingxian@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Leave a Reply