SHANGHAI, Apr 11 (SMM) – Production enthusiasm across Chinese electric arc furnace (EAF) steelmakers improved considerably in April as greater demand and lower costs widened profit margins, SMM research found on Thursday April 11.

SMM data showed that operating rates across 30 Chinese EAF steelmakers that produced steel products with scrap as feedstock averaged 76% as of April 9, up 18 percentage points from a month ago.

As of Wednesday April 10, costs for EAF-produced rebar came in at 3,796 yuan/mt. Based on Wantai prices in Shanghai, profits came in at 224 yuan/mt, up 274.8 yuan/mt from average losses of 50.8 yuan/mt in March.

Starts of construction projects in April spurred demand for steel products, and shored up steel prices, while prices of steel scrap dipped. This helped EAF steelmakers recover from losses and grew production enthusiasm.

SMM data also showed that the average operating rate across steel mills that procured billets to produce steel products stood at 83% as of April 9, up 15 percentage points from a month earlier.

Despite higher operating rates, most mills told SMM that they are operating close to, or in losses. Costs at mills in the north stood at 3,900 yuan/mt, with Tangshan billet at 3,550 yuan/mt, while costs for eastern mills came in at 3,940 yuan/mt, with Jiangsu Xuzhou billet at 3,690 yuan/mt.

Winter production curbs impacted output of billet, which resulted in low operating rates at some northern mills.