SMM daily comment on domestic steel mill capacity (Aug 9)

SHANGHAI, Aug 10 (SMM) –

According to SMM research, as of August 8, the operating rate of 34 electric furnace (EF) steel mills that mainly produce construction materials rested at 39.68%, down 0.62 percentage point WoW, and the capacity utilization rate was 40.68%, down 0.44 percentage point WoW. The average daily output of construction materials stood at 72,500 mt, down 800 mt WoW.

During the survey period (August 1 to August 8), as extreme weather made a big dent in demand, steel prices fell from high levels, narrowing profits of EF steel mills. Therefore, operating rate of EFs decreased by 0.62 percentage point WoW to 39.68%.

In terms of regions, in East China, as typhoon weather slowed down the construction progress of construction sites, terminal demand decreased significantly, thereby dragging down the operating rate of EFs by 2 percentage points WoW to 43%. In the South China, notwithstanding ultra-insufficient supply of specifications, the operating rate of EFs inched up to 50% this week, as falling futures and sliding steel scrap stimulated some EF steel mills to slightly increase demand for steel scrap. In Central China, production and sales remained stable, and the operating rate of EFs remained low at 17%. In the southwest China, with the end of Summer World University Games, EF steel mills resumed normal operation, and kept the operation rate at 43%, given little improvement to current profits.

In the follow-up, a slack seasonal demand blunted EF steel mills’ production enthusiasm. However, production resumption of EF steel mills in southwest China was reported, with the end of Summer World University Games in Chengdu. Under such circumstance, the operating rate of EFs may inch up next week.