EAF steel mills reported poor profitability, with operating rates down 1.18% WoW this week.

During the survey period (September 2–9), downstream demand showed no signs of significant seasonal strengthening. Total construction material inventories continued accumulating, with traders exhibiting weak purchasing willingness. Downstream enterprises mostly maintained purchasing as needed, and spot prices continued declining. This week, the spot price of steel fell by 33 yuan/mt WoW. Affected by the drop in spot prices, EAF steel mills saw reduced profitability, leading to cautious sentiment among EAF steel mills. Some mills adjusted production schedules downward, resulting in a nationwide EAF operating rate of 39.72%, down 1.18% WoW.

In east China, the EAF operating rate was 41.9%, down 3.7% WoW. Regional EAF mills reported little change in profitability, with one mill suspending operations for equipment upgrades and three others slightly reducing operating hours, leading to the overall decline. In south China, the EAF operating rate remained flat WoW at 44.8%. Despite fluctuating downward finished product prices, tight steel scrap supply persisted, prompting some mills to plan a shift to single-shift production later this month to mitigate operational pressure. In central China, the EAF operating rate held steady WoW at 30.3%, with most mills maintaining low operating levels due to poor profitability. Future production may adjust flexibly based on market conditions. In south-west China, the EAF operating rate was unchanged WoW at 38.3%. The influx of low-priced resources into the market disrupted sales for some mills, slowing shipment pace and increasing in-factory inventories.

Overall, as macro-driven effects weakened, market logic reverted to fundamentals. In the short term, EAF mills face both rising finished product inventories and higher steel scrap recycling costs. With additional production cuts planned for next week, the nationwide EAF operating rate is expected to decline further.