Thin Margins & Lackluster Demand Weigh on EAF Steel Mill Operating Rates

Published: Jul 8, 2026 09:38

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As of July 7, the operating rate of 50 electric furnace steel mills mainly producing building materials nationwide was 36.74%, down 2.24% from the previous period; capacity utilization rate at 36.65%, down 4.24% from the previous period; daily average production of building materials at 81,600 mt, down 9,400 mt from the previous period.
During the survey period (July 1-7), steel mills in multiple regions experienced shutdowns or reductions in operating hours. Specifically, in South China, some mills shut down electric furnaces due to poor profitability, while others in the region reduced operating hours. In south-west China, electric furnace mills reported lackluster shipments and elevated inventory pressure, prompting them to lower operating rates. Mills in east China and central China largely maintained their current production pace.
Looking ahead, the near-term fundamentals for building materials lack self-driving force, with prices consolidating at lows and limited room for notable improvement in per-mt steel margins. Meanwhile, typhoon warnings and rainy weather will disrupt outdoor construction, keeping end-user procurement mostly need-based. With weak production incentives for electric furnace mills, they are expected to maintain low-to-medium operating hours in the near term.

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