The recent uptick in domestic steel prices throughout China saw profit margins rise for most independent electric-arc-furnace (EAF) producers when selling their steel and most mini-mills are savouring the moment by ramping up production further, Mysteel’s latest survey has found.
Recently, domestic steel market sentiment has been bolstered by improved steel sales activity in the physical market, another factor helping to ensure domestic steel prices keep rising, Mysteel Global noted.
Mysteel’s assessment shows that as of March 9, China’s national price of HRB400E 20mm dia rebar, for example, had increased by Yuan 35/tonne ($5/t) on week to Yuan 4,361/t. In parallel, Mysteel’s steel scrap price index stayed largely stable at Yuan 3,213.1/t, up by a tiny Yuan 1.9/t, both including the 13% VAT.
As a result, the fast pace at which steel prices are climbing has largely improved the EAF mills’ profit margins, with Mysteel’s survey among 40 EAF mills across China showing that as of Thursday, they were earning Yuan 57/t when selling rebar, up by a large Yuan 49/t from the prior week.
Moreover, the dataq also showed that during the survey week the 40 sampled EAF mills were saving a huge Yuan 161/t on average when producing rebar during off-peak periods for power consumption, also higher by Yuan 43/t on week.
In tandem, the continuous recovery in the steelmakers’ margins resulted in a parallel increase in capacity usage among the domestic EAF producers. Over March 3-9, the capacity utilization rate among the 87 EAF mills nationwide which Mysteel regularly surveys rose for the sixth straight week by another 5.41 percentage points on week to 63.35% as of March 9, a new high since mid-May 2022.
“With the further recovery in China’s real estate market predicted and with the macroeconomy showing improved performance, steel demand and prices are likely to rise further in the near term,” a Shanghai-based market watcher commented. “I think we’ll see output among EAF makers keep rising in the next few weeks,” she predicted.
Written by Lindsey Liu, liulingxian@mysteel.com
Edited by Zhenqi Yang, yangzhenqi@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Leave a Reply