Operating rates across EAF steelmakers to dip in Jun as rainfall lowers demand in south

SHANGHAI, Jun 6 (SMM) – The average operating rate across 33 Chinese electric arc furnace (EAF) steelmakers who use steel scrap, rather than iron ore, as feedstock is expected to dip from 80% in May to 79% in June, showed the latest SMM survey.

This is lowered by mills in the south, where heavy rainfall hurt demand and weighed on spot prices, pushing mills into losses.  

Lower profits across other regions, however, will keep overall operating rates across EAF steelmakers at highs since the Chinese New Year holiday.

Based on steel scrap with a tax-included price of 2,430 yuan/mt, mills could see a margin of 152 yuan/mt as of Wednesday June 5, from a peak of 299 yuan/mt since the CNY break.

The SMM survey also showed that Chinese steel mills who purchase billets as raw materials operated at an average rate of 77% as of June 5, down 1 percentage point from a month ago.

Most mills told SMM that they were on the verge of losses, and some mills have curtailed production.