SMM Survey: Improved Profitability Drives 10 EAF Steel Mills to Extend Production Hours This Week

During the survey period (November 26 - December 2), the macro sentiment improved, and rising futures pushed spot market prices up continuously. This week, the average rebar price rose 40 yuan/mt WoW, leading to a significant improvement in EAF mill profitability. Ten EAF mills expanded capacity release by extending operating hours this week, resulting in a steady increase in overall production activity for short-process steel mills. Overall, the national EAF operating rate this week was 39.1%, up 0.74% WoW.

East China: The regional EAF operating rate was 46.7%, up 0.6% WoW. Benefiting from the continuous widening of the rebar-scrap spread, EAF mill profits approached nearly 100 yuan, boosting production enthusiasm. Two EAF mills in the region increased operating hours this week.
South China: The regional EAF operating rate was 50.7%, up 4.0% WoW. Sunny weather and suitable temperatures this week created favorable conditions for construction site activity. Coupled with rapid rises in regional finished steel prices, EAF mill profitability improved significantly. Driven by these dual positives, five EAF mills in the region extended operating hours this week.
Central China: The regional EAF operating rate was 15.5%, down 5.3% WoW. Overall EAF mill operations remained stable this week, but one mill suspended production for its annual equipment maintenance plan, causing the regional operating rate to decline.
South-west China: The regional EAF operating rate was 34%, up 1.5% WoW. Currently, inflows of external resources have decreased, and regional temporary shortages persist. Four EAF mills in the region extended operating hours this week, leading to a significant rise in the regional operating rate.

Overall, the ongoing rise in finished steel market prices has directly driven significant improvements in EAF mill profitability. Meanwhile, in some regions, production cuts at blast furnace enterprises mean temporary market supply shortages remain unresolved. Driven by the persistent supply-demand gap and recovering corporate profits, multiple EAF mills increased operating hours this week. Combined with clear production increase plans already announced by some EAF mills for next week, the national EAF steel operating rate is expected to show a steady upward trend next week.