SMM Electric Furnace Operating Rate: Poor Profitability Acts as a "Constricting Curse"; Three Additional Electric Furnace Mills Halted Production for Maintenance This Week

During the survey period (June 10-17), the spot price of rebar fluctuated, with overall weak trading activity. Amid escalating geopolitical risks overseas, the futures market for industrial commodities experienced amplified volatility. However, there was no significant improvement in the fundamentals of the ferrous metals series. Market trading enthusiasm remained lackluster, with apparent rebar demand declining and electric furnace mills' profits continuously compressed. This week, three additional electric furnace mills halted production for maintenance, while two others shortened their operating hours. Overall, the national electric furnace operating rate this week was 30.98%, down 3.66% WoW.
By region, in east China, the electric furnace operating rate for this period was 34.1%, down 2.6% from the previous period. This week, one additional electric furnace mill halted production for a half-month maintenance period, with most other electric furnace steel mills in the region maintaining low-level operations. In south China, the electric furnace operating rate for this period was 32.1%, down 6.9% from the previous period. With increased precipitation this week and sluggish market demand, coupled with intensifying losses at electric furnace mills, one electric furnace mill in the region halted production for maintenance, while two others shortened their operating hours. In central China, the electric furnace operating rate for this period was 19.3%, down 7.3% from the previous period. This week, one electric furnace mill in the region halted production for maintenance, driving down the overall regional operating rate. Purchase willingness in the off-season market was poor, with steel mills experiencing average sales. In southwest China, the electric furnace operating rate for this period was 33.1%, unchanged from the previous period. Currently, there have been no significant changes in the regional supply-demand pattern, with most steel mills maintaining their previous operating levels. Subsequent production volumes may be adjusted flexibly in response to market changes.
Currently, with an increase in hot and rainy weather, downstream construction activities are hindered. Coupled with the approaching senior high school entrance examination, there has been a marginal decrease in downstream demand release. Electric furnace mills will also reduce cost expenditures by lowering their operating rates to balance corporate operations and profit levels. Overall, the fundamentals of the steel market remain weak in both supply and demand. Subsequently, more electric furnace mills are expected to intensify production control efforts. Therefore, it is anticipated that the electric furnace operating rate may decline slightly next week.