Electric furnace steel mills continue to announce production cut plans, with operating rates expected to decline further next week

During the survey period (May 27 - June 3), the spot price of rebar fluctuated downward, with the average price falling 33 yuan/mt WoW. Rebar futures continued to hit new lows, and market sentiment turned more cautious, with overall trading activity remaining weak. Currently, the operating status of electric furnace steel mills varies across regions. One electric furnace steel mill in east China resumed production, driving up the overall regional operating rate. In south China, two electric furnace steel mills halted production for maintenance, leading to a significant decline in the regional operating rate. Overall, the national electric furnace operating rate this week was 38.42%, down 0.72% WoW.
Regionally, in east China, the current electric furnace operating rate was 43.4%, up 1.4% WoW from the previous period. Two electric furnace steel mills in the region shortened their operating hours due to losses this week, but the resumption of production at one electric furnace steel mill in Jiangsu drove up the overall regional operating rate. In south China, the current electric furnace operating rate was 39%, down 7.3% WoW from the previous period. Affected by the continuous decline in finished steel prices, the losses of electric furnace steel mills in the region widened. Two electric furnace steel mills halted production for maintenance this week due to losses, with a tentative maintenance period of one month. In central China, the current electric furnace operating rate was 32.3%, unchanged from the previous period. Steel demand remained weak, and there were no significant adjustments to the overall production pace of electric furnace steel mills, which currently maintained production during off-peak electricity hours. In southwest China, the current electric furnace operating rate was 35.7%, up 2.1% WoW from the previous period. Sichuan and Chongqing entered the rainy season, with certain electricity subsidy policies for industrial power consumption, reducing the production costs of electric furnace steel mills and leading to an increase in operating hours.
Overall, as the traditional off-season progresses and hot, rainy weather increases, it will be difficult for downstream demand to be released. Meanwhile, as the senior high school entrance examination and the college entrance examination approach, some construction sites will be prohibited from operating during certain time periods, strengthening expectations of weaker marginal demand. Next week, some electric furnace steel mills still have plans to halt production for maintenance, so it is expected that the operating rates of electric furnace steel mills will still decline slightly next week.