Profitability "Dragging Its Feet"! Electric Furnace Operating Rate Fell for Three Consecutive Weeks

During the survey period (September 16–September 23), the traditional peak season effect of "September peak season" in the steel market fell short of expectations. Demand side, the recovery momentum remained relatively weak, and end-users showed low acceptance of high-priced steel resources. Market procurement continued to be mainly need-based replenishment. Some electric furnace mills, constrained by both sluggish market conditions and high cost pressures, underwent shutdowns for maintenance. Overall, this week's national electric furnace operating rate was 37.9%, down 0.6% WoW.
East China, the electric furnace operating rate was 38.7%, up 0.5% WoW. This week, regional electric furnace mills saw relatively small changes in profitability. Individual mills, by producing high-value-added and high-profit steel products, achieved relatively better operational performance amid industry-wide profit pressures, leading to increased operating hours and a slight rise in the regional operating rate. South China, the electric furnace operating rate was 39.4%, down 3.2% WoW. Affected by typhoon weather, some regional electric furnace mills faced shipment disruptions, significantly reducing product circulation efficiency. Coupled with the overall poor operational profitability of electric furnace mills, one additional mill underwent shutdown for maintenance this week. Central China, the electric furnace operating rate was 30.3%, flat WoW. Currently, regional electric furnace mills experienced a pullback in profitability, and difficulties in scrap collection persisted. Most mills maintained low operating levels, with future adjustments to production pace and scale likely based on profitability fluctuations. South-west China, the electric furnace operating rate was 39.5%, flat WoW. Steel scrap supply remained relatively tight, with ongoing raw material supply pressures. Mill losses widened by 20 yuan/mt WoW, and production was maintained during off-peak electricity hours. Overall, with the National Day holiday approaching, pre-holiday restocking is expected to drive some demand release. However, considering that most steel mills currently face difficulties in improving profitability, and individual electric furnace plants still have production cut plans in the near term, it is anticipated that the operating rate of electric furnaces may continue to decline slightly next week.