[SMM Electric Arc Furnace Operating Rate] Electric arc furnaces faced a wave of shutdowns

According to the SMM survey, as of August 13, the operating rate of 50 major rebar electric arc furnace steel mills nationwide was 18.02%, down 2.46 percentage points WoW; the capacity utilization rate was 20.03%, down 1.43 percentage points; the average daily output of rebar was 44,600 mt, down 3,200 mt.

During the survey period (August 7 - August 13), the market prices continued to decline. In the spot market, the off-season weakness, lack of macroeconomic benefits, and speculation over the transition between new and old national standards led to widespread market concerns. Spot prices fell rapidly, making it difficult for steel mills to turn a profit. Last week, the operating rate of electric arc furnaces decreased by 2.46 percentage points to 18.02%, reaching the lowest point since the beginning of the year.

By region, in east China, electric arc furnace steel mills alternated between stopping and resuming production, but most mills remained shut down. The operating mills maintained a low operating rate. However, the price of steel scrap recently dropped rapidly, and some mills plan to stockpile low-price steel scrap and resume production after a subsequent rebound. In south China, regional inventory continued to deplete, with overall inventory pressure being relatively low. This period saw some mills resuming production after temporary inspections, leading to a slight rebound in the regional operating rate. In central China, steel mills continued to incur losses, and the overall operating rate dropped to extremely low levels. In southwest China, the price of steel scrap accelerated its decline. Although the extent of losses for steel mills narrowed, sales were poor, making it difficult to turn a profit. This period saw additional mills halting production for maintenance, further decreasing the regional operating rate.

Looking ahead, the macro perspective shows little optimism, with interest rate cut expectations nearing their end. On the industrial side, pig iron is declining, coke prices continue to fall, and support from raw materials is weakening. On the finished products side, the weak supply and demand persists, making it difficult for steel mills to turn a profit, resulting in low production motivation. There may be additional steel mill shutdowns in the next period, and the operating rate is expected to decrease slightly.