Our website uses cookies to ensure that we give you the best experience on our website. If you continue we'll assume that you are happy to receive all cookies on the metal.com website.
Got it
Home / Metal News / EAF steelmakers scale back production on losses and scrap tightness

EAF steelmakers scale back production on losses and scrap tightness

iconNov 6, 2019 07:40
Source:SMM
As of Nov 6, operating rates across EAF steelmakers stood 20 percentage points lower from last year

SHANGHAI, Nov 6 (SMM) – China's electric arc furnace (EAF) steelmakers slowed their production in early November, pressured by long-term losses amid tightness of feedstock steel scrap.  

As of November 6, operating rates across EAF steelmakers stood at 55%, down 2 percentage points from a month ago and down a sharp 20 percentage points from last year, according to the latest SMM survey.

Operating rates across EAF steelmakers in China

Spot prices of finished steel products, however, may see limited buoyance as the smaller output from EAF steelmakers was offset by ramped-up production at steel rolling mills, whose operating rates climbed 2 percentage points on the month as of November 6. 

Since the second half of the year, EAF steel mills in China have struggled with the rising costs of raw material steel scrap and weak prices of spot steel. 

While steel prices recently picked up, most of the EAF steelmakers still faced losses, which were assessed at an average 126 yuan/mt, based on tax-included scrap costs of 2,540 yuan/mt.

Steel plants in ease and south-west China, where most EAF steelmakers are located, reported lower production as they failed to secure scrap resources. 

The scrap market was significantly tightened up by brisk demand from blast furnaces and domestic stricter controls on waste imports, SMM believes. 

High profits bolstered production of blast furnaces and triggered additions of new capacity. SMM assessed that some 42.7 million mt of pig iron capacity would be added this year. 

Since July 1, eight types of solid waste including steel scrap were recategorised into restricted imports that can be used as raw materials. This came after China banned the import of ships and offshore units for scrapping since the start of the year.

SMM expects the year-over-year lower operating rates at EAF steel mills to sustain as profits at those producers will be hard to improve in the short term. 

Market commentary
EAF
Steel scrap

For queries, please contact William Gu at williamgu@smm.cn

For more information on how to access our research reports, please email service.en@smm.cn

Related news

SMM Events & Webinars

All