The capacity utilization rate among the 87 independent electric-arc-furnace (EAF) steel mills across China under Mysteel’s regular survey rose for a fifth straight week as of March 2, climbing by another 4.7 percentage points on week to average 57.94%. Hopes for an increase in steel demand and for improved margins are encouraging more mini-mills to beef up production, survey respondents said.
The periods dubbed “golden March” and “silver April” are usually peak months for steel trading and consumption in China, Mysteel Global noted. As a result, some independent EAF makers across the country are actively ramping up production to prepare sufficient finished steel stocks for the rise in steel consumption expected in the near term.
On the other hand, domestic steel market sentiment was also boosted recently by the improving performance of China’s macroeconomy, according to a Shanghai-based market watcher. This led to a rebound in finished steel prices and so helped some EAF producers’ profit margins to stay healthy.
For example, Mysteel’s other survey among 40 EAF mills across China showed that currently, these mills are saving Yuan 118/tonne ($17.1/t) when producing rebar during off-peak periods for power consumption – in the early morning and late evening.
“After experiencing persistent losses during the past few months, margins at the moment are rather high for these EAF makers,” the market watcher explained. “That’s why they are making sure their production is smooth or are even ramping up output to maximize their profits at this time.”
As of March 2, China’s national price of HRB400E 20mm dia rebar had climbed for the second day by a total of Yuan 19/tonne ($2.8/t) from February 28 – after softening for the three previous working days – to reach Yuan 4,326/t and including the 13% VAT, according to Mysteel’s assessment.
Written by Lindsey Liu, liulingxian@mysteel.com
Edited by Zhenqi Yang, yangzhenqi@mysteel.com
Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.
Leave a Reply