SMM Iron and Steel, 15 April:
According to SMM, as of April 15, the operating rate of EAF steel plants reached 63.46%, up 10.87% from 52.59% at the beginning of April (this data includes a new sample of independent EAF steel plants).
Figure 1: trend of operating rate of Electric Arc Furnace Steel Plant from 2019 to now
Source: SMM
Recently, market sentiment has been boosted by the continuous rise in futures prices, scrap prices have also rebounded sharply after the previous "collapse", and even heavy scrap prices in Hangzhou, Guangzhou and other regions have risen by more than 100 yuan / ton. In this case, the operating rate of electric arc furnace steel plant is still rising slowly. The main reasons are:
First, profit-driven. According to SMM research, even after the rebound in scrap purchase prices, 53.8% of EAF steel mills still report a profit of 50-100 yuan / ton, and more than 75% of the steel mills that have already started say they are currently profitable. According to the calculation of SMM data model, according to the price of 1890 yuan / ton Changzhou scrap without tax, the gross profit per ton of EAF steel plant is more than 200 yuan / ton.
Table 1: changes in scrap prices and spot thread prices in mainstream markets
Source: SMM
Second, under pressure to withdraw funds. After the festival steel price "cliff" type falls, in addition the electric arc furnace steel factory experiences more than 2 months "empty window period", the capital end has certain pressure. In the near future, terminal demand has continued to recover, the disk has also continued to rise, the spot market shipping situation has improved significantly, the relevant enterprises immediately resumed production, and actively shipped, in order to withdraw funds as soon as possible.
In the later stage, with the gradual resumption of the maintenance of the blast furnace plant and the recovery of the operating rate of the electric arc furnace steel plant, the demand for scrap is expected to rebound to a certain extent, thus restricting the further substantial increase in the operating rate of the electric arc furnace steel plant. In the later stage, or maintain a state of about 65-75% of the operating rate.
[subregional]
East China: the operating rate rose 10% to 58% from 48% in early April.
On behalf of steel mill A: when the scrap price is raised by nearly 100 yuan / ton, the profit shrinks immediately, and the current profit is only a few dozen yuan. At present, it is mainly positive shipment, the future market is not very optimistic, scrap prices are expected to continue to rebound, and the price increase is also very limited.
Central China: the operating rate is still low at about 35%, Hubei electric furnace plant has not yet started, Henan electric furnace plant is more feedback profit of nearly 100 yuan / ton.
On behalf of steel mill B: start about 50%. There are profits, but after the price increase, it will not be very easy to purchase.
South China: the operating rate has rebounded by 21% to about 61%.
On behalf of the steel mill C: the current profit has been reduced from more than 100 yuan in the previous period to only a few dozen yuan, but the production is still normal, and the shipping situation has also slightly improved compared with the previous period.
Southwest region: the local electric arc furnace steel plant has basically started construction.
On behalf of steel mill D: it is still in normal production at present. Scrap prices have gone up and will only protect capital, and now the purchase price is 2250-2280 yuan per ton.
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For more information, please contact SMM Steel: Lu Qingping Tel: 021-51595781
