According to the survey of SMM, as of July 28th, the operating rate of 34 independent electric arc furnace steel mills in China was 81.27%. It rose 2.72 percentage points from last week, 3.54 percentage points higher than the same period last month. It has been three consecutive weeks of rise this week, mainly due to the reduction of the geographical scope affected by the rainy season, so that demand has gradually begun to improve, and the shipping situation of steel mills has also improved compared with the previous period. The relief of factory warehouse pressure has led to the resumption of production of some steel mills that have reduced production as a result. According to the research situation of SMM, the overall terminal enterprises still have expectations for an increase in steel procurement in August, and the warming momentum of demand will support the slow recovery of the operating rate of electric arc furnace. However, due to the current scrap prices are still strong, and inventory suppression of steel prices are difficult to have a sustained rebound, so the upward space is limited.
Figure 1: trend of operating rate of electric arc furnace from June 2020 to now