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If the steel price takes off, where will the electric arc furnace steel plant go?
The content below was translated by Tencent automatically for reference.

Since June, with the continuous weakening of steel prices, the profits of electric arc furnace steel mills have shrunk, and even in eastern and southern China, there have been varying degrees of production reduction (according to SMM statistics, the operating rate of electric arc furnace steel mills in June was 79%, 1 percentage point lower than that in May, and the production reduction may have increased with the decline in prices in the later period). However, after more than a month of decline, steel prices have recently risen rapidly under the stimulus of environmental protection and production restrictions. In just two days, the national average price rose 86 yuan / ton to 4021 yuan / ton, and the profit situation of short-process steel mills has also been improved to a certain extent. According to the SMM data model, based on the price of 2480 tax-including scrap steel, as of June 25, the electric arc furnace steel plant once again turned to profit, and the profit per ton of steel was 36 yuan per ton (according to SMM's calculation, the electric arc furnace steel plant lost 41 yuan per ton last week).

In this case, according to SMM research, steel mills feedback even if there is a production reduction plan, now due to rising prices, now also maintain more production. Of which:

Steel mill A (East China): since last week entered the loss state, the steel mill starts the time to reduce 6 hours, at present starts 16 hours every day, these two days out of the mill price has raised 100 yuan / ton, now each ton profit has 30 to 50 yuan (mainly because of the purchase scrap price also raised nearly 50 yuan), due to the scrap resources are relatively tight, there is no plan to resume production for the time being.

Steel mill B (East China): since Friday, the factory price has increased by 140 yuan to 150 yuan per ton, and now the net profit per ton of steel is nearly 100 yuan. Maintain normal production at all times.

Steel mill C (Central China): the ex-factory price has been raised by 70 to 80 yuan / ton in the past two days, but because the profit has been in a state of capital preservation for a long time, the length of construction has been reduced (18 hours at the beginning of the month and about 10 hours recently).

Steel mill D (South China): in the past two days, the ex-factory price has been raised by 100 yuan / ton, the profit has been improved to a certain extent, no loss will always maintain normal production.

Steel mill E (southwest): the recent profit increased by 30 to 50 yuan / ton compared with the previous period. Originally, if the price continues to go down, it is ready to reduce production, but because of the rise in prices and the fact that the shipping situation has also improved, it is still in normal production.

According to the investigation, the production reduction trend of electric arc furnace steel mills in most areas has been curbed, and some steel mills with production reduction plans have not yet had time to implement them because of the rising steel prices. Therefore, in the short term, the output variables of electric arc furnace steel mills are limited. However, in terms of long-process steel mills, due to the recent news of environmental protection and production restrictions all over the country, in addition to the recent market focus on soaring steel prices-Tangshan production restrictions, Jiangsu Province will also hold a promotion meeting on the transformation of ultra-low emissions in the steel industry of the whole province on the 28th, and may issue relevant documents at a later stage. If the scope of production restrictions continues to expand, it will continue to support the strong operation of steel prices.

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