Mysteel Global: The enthusiasm for producing steel displayed by Chinese electric-arc-furnace (EAF) steelmakers cooled last week, diminished further by their worsening losses on steel sales plus waning steel demand, the results of Mysteel’s latest survey showed.
During 1-8 May, the capacity utilisation rate among the 90 independent EAF steelmakers under Mysteel’s regular tracking decreased for the second straight week, albeit by a slower 0.4 percentage points, to reach 55.1%, while their average operational rate also fell by 0.2 percentage points from the prior week to 72.7%. Although much of the sample week was taken up by China’s five-day Labour Day holidays, many EAF mills continued to operate as normal throughout the holiday break.
Some mini-mills in Central China’s Hubei and Southwest China’s Sichuan provinces shut down their furnaces to conduct regular maintenance this week, resulting in the decrease in the country’s output overall, survey respondents said.
Although other mills in Southwest China’s Yunnan and Southeast China’s Fujian had completed maintenance and restarted operations, their production capacity was relatively small, Mysteel Global learned.
On the other hand, the retreat in prices of finished steel after the Labour Day holidays ended 5 May caused mills to incur heavier losses when selling their products, Mysteel’s other survey showed.
By May 8, for example, China’s national spot price of HRB400E 20mm diameter rebar was assessed by Mysteel at Yuan 3,323/tonne ($459.9/t) including the 13% VAT, lower by 0.8% from April 30.
Though the price dip from end-April was small, by Thursday the average loss on rebar sales reported by the 66 independent EAF mills under Mysteel’s tracking was Yuan 96/t, larger than the Yuan 78/t loss recorded on April 30.
Moreover, the outlook of steelmakers for steel consumption in the coming weeks is dim, as the market is gradually entering the traditional slack season for steel demand, and the potential surplus in steel supply under the impact of mounting tariff barriers may lead to fiercer market competition, Mysteel Global learned.
Under such circumstances, China’s EAF steel output is likely to drop further next week, Mysteel’s survey suggests.
Note: This article has been written in accordance with a content exchange agreement between MySteel Global and BigMint.
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