Some Steel Mills Resume Production as Planned After the Holiday, Electric Furnace Operating Rate Rises Against the Trend

Survey period (October 8–14) marked the first week after the National Day and Mid-Autumn Festival holidays. End-user restocking demand fell short of expectations, construction steel inventory remained high, and market sentiment turned bearish after Trump announced the US would impose 100% tariffs and export controls on China effective November 1. Spot prices remained in the doldrums.
Most EAF steel mills continued to operate at a loss during the period. Some mills reduced operating hours or switched to other steel products. However, as scrap prices fell during the holiday, some EAF mills that had suspended production in September stockpiled scrap. With lingering expectations for October peak season demand, mills resumed production as planned, lifting the national EAF operating rate to 38.40%, up 2.22% WoW.

Regional performance varied. East China recorded a 43.69% EAF operating rate, up 4.5% WoW, as two previously idled EAF mills restarted as scheduled, and some mills slightly extended operating hours due to better margins on certain products. South China’s rate rose 6.75% WoW to 45.08%, mainly due to one mill completing EAF upgrades and returning to normal operations. Central China saw a 25.0% rate, down 5.25% WoW, as several mills cut operating hours amid persistent losses. South-west China held steady at 34.71% WoW, with most EAF mills in the region maintaining off-peak electricity production levels while remaining unprofitable.

Macro perspective, no positive news emerged. Market focus remained on fundamentals. Construction steel demand stayed subdued, with most transactions occurring at low prices, helping ease inventory pressure. In the short term, spot construction steel prices are more likely to fall than rise. EAF mills are expected to continue losing money per mt of steel produced, and scrap procurement challenges persist. The national EAF operating rate is likely to remain low in the next survey period.