Operating Rate Declined for Three Consecutive Weeks: When Will the Electric Furnace Mills’ Winter Thaw?

During the survey period (October 28–November 4), spot prices first rose then fell. In the first half of the week, driven by macro tailwinds, futures strengthened and rebar spot prices increased. However, as positive news was digested, downstream end-users became more cautious about procuring high-priced resources, and market trading pace slowed down. In the second half of the week, spot prices declined, though the average price remained flat WoW. Electric furnace mills saw little change in profitability. Overall, this week’s national electric furnace operating rate was 35.72%, down 1.6% WoW.

In east China, the electric furnace operating rate was 43.7%, down 0.3% WoW. Operating hours among regional mills varied: one mill cut production due to equipment failure, while another increased operating hours slightly following adjustments to critical peak electricity periods. In south China, the operating rate held steady at 45.2% WoW. Favorable weather supported operations, downstream demand increased slightly, and mill profitability improved modestly, though most remained in the loss zone and maintained previous production pace. In central China, the operating rate dropped 6.4% WoW to 18.6%. Profitability changed little for most mills, with many maintaining earlier operating levels; a few mills suspended production for maintenance due to persistent losses, with resumption timelines pending. In south-west China, the operating rate fell 1.8% WoW to 28.3%. Adjustments to electricity pricing policies in Sichuan raised production costs, prompting three mills in the region to reduce operating hours in response to cost pressure.

Overall, the traditional peak demand season for steel has passed. After the macro sentiment-driven rally, fundamental pressures on steel have intensified. In the short term, electric furnace mills still face dual challenges of losses and difficulty procuring steel scrap. However, with two mills having clear production resumption plans next week, the national electric furnace operating rate is expected to increase slightly.