Since July, even though there have been more than expected macro data and "endless" production restrictions, thread spot prices have remained indifferent to successive attacks by precipitation and high temperatures.
However, at the same time, scrap prices are like God's help. According to SMM statistics, the spot prices of scrap steel have risen by 70 to 140 yuan / ton from July 1 to now. Among them, the central and southern regions, where the focus of production restriction is Tangshan and the production capacity of electric arc furnaces is relatively concentrated, have increased the most, reaching 130 to 140 yuan / ton.
In the spot price is tepid, and the cost-end price goes up all the way, the electric arc furnace steel mill enters the loss state again. According to the SMM data model, based on the price of 2370 yuan / ton Changzhou scrap steel without tax, as of today, the loss per ton of steel in electric arc furnace steel plant has reached 38.50 yuan.
According to SMM research, there are regional differences in the profits of electric arc furnace steel mills. Because the scrap price of electric arc furnace in southwest China is relatively low, and the spot price of thread is at the high level in the whole country, the profit of 70 yuan per ton steel is still in the state of full production, while in East China, when the steel price and cost are not dominant, most steel enterprises still produce normally, but some steel enterprises choose to reduce production because of the aging of equipment and other problems. On the other hand, the profit situation of electric arc furnace steel enterprises in South China is even more unoptimistic. According to the feedback of many steel enterprises, they are in a state of loss for a long time. At present, the loss per ton of steel is about 30 to 60 yuan, and the operating rate has been maintained at 50 percent to 70 percent for a long time.
Overall, although the current market bullish sentiment is still dominant, the willingness to take the initiative to reduce production is not strong, but after a wave of increases in late June, steel prices have always been in a weak consolidation state since July. If there is no sign of rising, the scope of production reduction in electric arc furnace steel mills may be expanded and the thread supply may be reduced.
[feedback on specific research]
Steel mill A (East China): from the beginning of the month to now scrap prices have risen by 100 yuan / ton, there is no profit, so production has been reduced again, and now the start-up rate is about 65%, but the price is still bullish in the future.
Steel mill B (East China): it still maintains normal production. At present, it has only a small profit of 30 to 50, and at the beginning of the month, it can still earn about 100 yuan per ton of steel.
Steel mill C (South China): the recent scrap steel rose by 70 to 80 yuan / ton, the order situation is not good, the sales situation directly put on the market is general. At present, there is no plan to resume production, and the starting rate is about 50%.
Steel mill D (South China): scrap steel has increased by about 170 yuan / ton so far at the beginning of the month, and a loss of 50 to 60 yuan per ton of steel has been incurred. At present, it still maintains 70% production, the order sales situation is not good, the recent rainy site start-up rate is low.
Steel mill E (southwest): it is still in full production, but since July, steel prices have fallen by 40 to 50 yuan per ton, while scrap steel has risen by more than 100 yuan, making profits rapidly compressed. Now the profit per ton of steel is 70 to 100 yuan.
