Average capacity utilization among the 85 independent electric-arc-furnace (EAF) steelmakers under Mysteel’s regular survey decreased for the third straight week by another 3.42 percentage points on week to 55.87% as of May 26, hitting a near three-month low. Behind the decrease was the reduction in output among China’s steelmakers bearing thinning margins or even losses.
The EAF capacity utilization rate was lower on year by a huge 27.98 percentage points too, according to Mysteel’s assessment.
“The decrease in steel demand and bearish market sentiment caused by the prevailing virus situation in many regions, has caused domestic steel prices to continue softening, and steel mills including EAF producers, have been compelled to cut steel output in response to poor profits or losses, even though production costs have eased too,” a Shanghai-based market watcher commented.
As of May 27, China’s national price of HRB400 20mm dia rebar, for example, had lost another Yuan 84/tonne ($12.6’t) on week to reach Yuan 4,765/t, while Mysteel’s steel scrap price index decreased too by Yuan 90.6/t on week to Yuan 3,749.1/t on delivery, both including the 13% VAT.
In tandem, Mysteel’s other survey among 40 EAF steel mills nationwide showed that as of last Thursday, the mills were losing Yuan 62/t when producing and selling rebar.
However, by last week EAF steel mills in South China finally began to earn money, with average profit margins among local mini-mills recovering from weeks of losses to reach (an albeit tiny) Yuan 14/t, another market watcher in South China’s Guangdong observed.
“Despite their improving margins, most local EAF makers continued to maintain low production, showing no inclination to ramp up production immediately, as the frequent heavy rains recently have largely slowed finished steel sales, and dampened the mills’ enthusiasm for producing,” she explained.
Written by Lindsey Liu, liulingxian@mysteel.com
Note: This article has been published in accordance with an article exchange agreement between Mysteel Global and SteelMint.
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