SMM EAF Operating Rate: Multiple EAF Mills Reduced Operating Hours, WoW Operating Rate Down 1.22%

During the survey period (September 9 to September 16), expectations for US Fed interest rate cuts strengthened, coupled with domestic re-issuance of policies to curb low-price disorderly competition among enterprises, market sentiment improved, and spot prices rose. This week, the spot price of steel rose 22.6 yuan/mt WoW. However, as steel demand improved slowly and the steel market continued to experience weak supply and demand, total construction materials inventory kept accumulating. EAF steel mills remained cautious, and multiple EAF mills reduced operating hours this week. Overall, the national EAF operating rate this week was 38.5%, down 1.22% from the previous period.
In east China, the EAF operating rate was 38.7%, down 3.2% from the previous period. This week, the increase in steel scrap prices in the region was greater than that of finished products, reducing EAF mill profitability. One additional EAF mill underwent maintenance shutdowns, and two EAF mills reduced operating hours. In south China, the EAF operating rate was 42.6%, down 2.3% from the previous period. Currently, EAF mills are experiencing poor profitability, coupled with a slight accumulation of in-factory inventory at steel mills. Some EAF mills shortened operating hours to alleviate inventory pressure. In central China, the EAF operating rate was 30.3%, flat from the previous period. This week, the supply and demand conditions in various sub-regions did not change significantly, and most steel mills maintained operating conditions consistent with the previous period. Subsequent production will be flexibly adjusted based on market demand, price trends, and other actual conditions. In south-west China, the EAF operating rate was 39.5%, up 1.2% from the previous period. This week, individual EAF mills increased operating hours to ensure annual capacity completion, leading to a slight rise in the regional operating rate.
Overall, domestic voices for anti-involution and production control have reemerged, futures rose in response, driving spot prices to follow. However, with high finished product inventory and no significant short-term demand improvement, some EAF mills still have production cut plans. Therefore, the national EAF operating rate is expected to decline further next week.