SMM Electric Furnace Operating Rate: Resumption of Production at a Single Mill Boosts This Week's Operating Rate, While Next Week's Operating Rate May Face Downward Pressure

During the survey period (May 20-27), the spot price of rebar fluctuated downward, with overall poor trading conditions. Currently, the futures market has fallen below the 3,000-point mark, leading to a weak market sentiment and generally low trading enthusiasm. Currently, the operating rates of electric furnace mills vary across different regions. In east China and the southwest region, the economic benefits of electric furnace mills declined WoW, with multiple steel mills reducing their operating hours. In central China, one electric furnace mill resumed production as planned, driving up the overall electric furnace operating rate. Overall, the national electric furnace operating rate this week was 39.14%, up 0.68% WoW.

By region, in east China, the electric furnace operating rate this period was 42.1%, down 0.9% from the previous period. Affected by the continuous decline in spot prices and difficulties in collecting steel scrap, the production enthusiasm of some electric furnace mills decreased, with a slight reduction in operating hours. In south China, the electric furnace operating rate this period was 46.3%, unchanged from the previous period. Persistent high temperatures and rainy weather in the region have disrupted construction site operations, leading to continued weak demand for steel. Electric furnace mills have maintained production during off-peak electricity periods. In central China, the electric furnace operating rate this period was 32.3%, up 10.4% from the previous period. This week, one electric furnace mill completed maintenance and resumed normal production, driving a significant increase in the overall regional operating rate. In the southwest region, the electric furnace operating rate this period was 33.6%, down 2.4% from the previous period. Affected by heavy rainfall and a decline in spot prices, the profits of multiple steel mills turned negative, leading to a slight reduction in operating hours.

Currently, there are no new expectations for macro policies in the market, and the sustainability of end-use demand is insufficient. Coupled with the approaching plum rain season and an increase in rainy weather, the progress of construction projects for building materials may slow down. Electric furnace mills will also reduce cost expenditures by lowering operating rates to maintain corporate operations and profit levels. Therefore, it is expected that the electric furnace operating rate will decline slightly next week.