[SMM Analysis] Shrinking Profits Weigh on EF Steel Mill Operating Rates

Published: May 19, 2026 17:19

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As of May 19, the operating rate of 50 major construction material-producing electric furnace steel mills nationwide was 40.2%, down 1.7% WoW; capacity utilization rate was 42.3%, down 0.63% WoW; daily average production of construction materials was 94,300 mt, down 1,400 mt WoW.

During the survey period (May 13–May 19), regional performance showed slight divergence. In east China, some steel mills still maintained per-mt steel profits at high double-digit levels and slightly raised operating hours. In south China, steel mills saw per-mt profits shrink or even turn to losses, with multiple electric furnace mills reducing operating hours or halting production for maintenance, causing the nationwide electric furnace operating rate to decline 1.7% WoW.

Overall, electric furnace per-mt steel profits were significantly affected by market fluctuations. Continued price pullbacks, combined with the market being dominated by rigid-demand low-price procurement, led to involution among steel mills, with per-mt profits mostly staying at low levels and limited production enthusiasm. Meanwhile, scrap steel sourcing difficulties persisted. In the short term, most electric furnace mills are expected to maintain off-peak electricity production levels, and electric furnace operating rates may continue to decline.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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