SHANGHAI, Apr 25 (SMM) – Operating rates of independent electric arc furnaces (EAF) steel mills that only produce with EAFs, have climbed up steadily from March 2017 to reach a high of over 60% currently, SMM learned. This drove up steel output significantly. 

With China's efforts since 2016 to eliminate ditiao steel, more steel mills replaced their intermediate frequency furnaces with EAFs in order to produce quality steel. The process usually takes 18 months to complete. While companies with EAF certificates have begun to operate, the rest are likely to complete upgrading and resume production in May or June, as most of the necessary facilities have been put in place.

Driven by high profits of 200-300 yuan/mt, some plants without EAF certificates continued to produce. This was common in the mountaineous and coastal areas in south and south-west China.

SMM believes that the supply of steel is likely to surge as healthy profit margins drive more steel mills with EAF qualifications to resume operation. Operating rates of independent EAF mills in May is expected to rise to 67.9%. SMM also surveyed that there is about 48 million mt of EAF capacity under construction over the next two years. 

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