The capacity utilization rate of the 71 independent electric-arc-furnace (EAF) steelmakers across China under Mysteel’s regular survey rose for the second week by another 13.32 percentage points on week to 15.96% as of February 17, as more EAF producers have gradually switched on their furnaces after the holidays, according to Mysteel’s assessment.
Some EAF steelmakers had restarted production after the Chinese New Year holiday (over January 31-February 6) when steel demand began recovering steadily after end-users recommenced business following the long break, Mysteel Global noted.
The restart of EAF mills also had had an impact on steel scrap consumption levels. For example, over February 11-17, daily scrap consumption among the 61 steel mills under Mysteel’s regular survey jumped by 8.2% on week to 2,720 tonnes/day on average.
Despite the recovery in EAF makers’ capacity use, the resumption rate of these steelmakers was still slower than market observers had expected, Mysteel Global noted.
“The recent drop in both domestic steel prices and raw material prices such as iron ore – when steel scrap prices remain firm – is squeezing most EAF producers’ profit margins,” a Shanghai-based market watcher remarked.
As of February 21, China’s national price of HRB400E 20mm dia rebar decreased by Yuan 81/tonne ($12.8/t) on week to Yuan 4,929/t, and Mysteel PORTDEX 62% Australian Fines in Qingdao dropped by Yuan 60/wmt to Yuan 883/wmt. On the same day however, Mysteel’s steel scrap price index remained largely stable at Yuan 3,654.8/t, up by a tiny Yuan 3.6/t, all including the 13% VAT, according to the database.
Besides the EAF makers’ narrowing margins, the limited steel scrap availability is also preventing mini-mills from resuming operations fast, Mysteel Global was told.
“Some scrap collectors have not yet restarted work after the Lantern Festival on February 15,” the Shanghai market source commented. “In addition, the rigorous testing of truck drivers to prevent the spread of COVID-19, plus the closure of some highway exits and entrances for the same reason, are disrupting scrap deliveries to mills in eastern areas of China,” she added.
Over February 11-17, scrap deliveries to the 61 surveyed steel mills under Mysteel’s regular survey averaged a low 2,471 t/d. Some steel mills are having to consume their in-house inventories to maintain production, Mysteel Global noted.
Written by Lindsey Liu, liulingxian@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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