With the intensive production resumption after Feb 24, have electric furnaces achieved a good start? [SMM electric furnace operating rate]

According to SMM research, as of February 27, the operating rate of the country's 50 electric furnace steel plants that mainly produce building materials was 33.76%, an increase of 30.32 percentage points from the previous month; the capacity utilization rate was 36.84%, an increase of 33.84 percentage points from the previous month; the average daily output of building materials was 82,100 tons, an increase of 75,400 tons from the previous month.

During the survey period (February 20-February 27), rebar prices fluctuated, and spot prices showed mixed performance. Downstream construction units resumed work, and market transactions gradually recovered. Most electric furnace steel plants resumed production after Feb 24, but considering the recent market trend is not good, and some electric furnace steel mills are still waiting and watching. The steel mills that have resumed production mainly based on valley power production. This week, the electric furnace operating rate is 33.76%.

In terms of regions, in east China, most steel mills resumed production after Feb 24. Only a few steel mills have postponed their production resumption to March due to rolling machine maintenance and upgrades. Prices in the region fluctuated greatly, and the cumulative drop in steel prices after the holiday exceeded 100 yuan/ton, most electric furnaces that have resumed production are at a loss, and some electric furnace steel plants have lost as much as 50 yuan/ton; in south China, although steel prices and profits fell, most electric furnace steel plants still have a profit of 10-100 yuan/ton, except for a few steel mills that have temporarily suspended production due to technical transformation, most of the sample steel mills have resumed production; in central China, affected by the cold wave, demand is still gradually recovering, and the number of electric furnaces that have resumed production is relatively small, and the operation hours remain below 12 hours at most; in the southwest China, steel prices fell recently, and demand has not yet picked up. Although most electric furnace steel mills in the region have resumed production, they can only achieve breakeven. Valley power production is the main focus, and the mentality is more cautious.

More than half of the electric furnace steel plants have resumed production after Feb 24, and some other steel plants also planed to resume production in the near future. However, considering the recent profit level, valley power production may still be the mainstream, and the electric furnace operating rate is expected to continue to rebound next week.