Improved profits lead to increased production at electric furnace mills; further increase expected next week

In east China, the operating rate of electric furnaces this period was 40.6%, up 1.1% from the previous period. One additional electric furnace mill resumed production this period, mainly due to the continuous collection of steel scrap after the previous shutdown. Coinciding with the continuous rise in spot prices over the past two weeks, the overall profit was nearly 100 yuan/mt. The resumed production temporarily maintained a single-shift production rhythm. In south China, the operating rate of electric furnaces this period was 43.8%, up 6.7% from the previous period. Currently, electric furnace mills in the region have high enthusiasm for production. After the recent rise in spot prices, the profitability of multiple electric furnace mills improved. Among them, one electric furnace mill extended its operating hours. In addition, some steel mills resumed production as planned, resulting in a significant increase in the overall operating rate. In central China, the operating rate of electric furnaces this period was 18.8%, unchanged from the previous period. The issue of difficulty in collecting steel scrap persisted, and the recent increase in steel scrap prices was basically consistent with that of finished steel, resulting in no significant improvement in profitability. Manufacturers basically produced small-sized products with profitability, so there was little change in the production of electric furnace mills in the region. In southwest China, the operating rate of electric furnaces this period was 33.1%, unchanged from the previous period. Although profitability improved this period, steel mills that had previously shut down considered the difficulty in collecting steel scrap recently and decided not to resume production in July. They would adjust based on profitability in the future. Other steel mills temporarily maintained their previous operating hours.
Overall, during the traditional off-season, the market continues to be dominated by strong sentiment, and there is still a possibility for spot prices to rise. Given the overall improvement in profitability, it is expected that two additional electric furnace mills will resume production next week. Therefore, it is anticipated that the national operating rate of electric furnace mills will continue to increase next week. However, considering the current decrease in steel scrap volume and changes in the scrap collection grades of blast furnace mills, with some steel scrap types overlapping with those of electric furnace mills, the pressure on electric furnace mills to collect steel scrap has increased. The extent of the increase in the operating rate of electric furnaces in the future may be limited.