SMM Electric Furnace Operating Rate: 6 Declines, 9 Increases – Electric Furnace Operations "A Mix of Ice and Fire"

During the survey period (December 3–9), spot rebar prices first rose then fell. Last week, influenced by expectations surrounding central government work, market anticipation for the future remained, driving spot rebar prices up rapidly. However, this week, dragged down by weaker raw material futures, steel prices followed a downward trend. Profitability among electric furnace mills varied slightly across regions, resulting in a mixed pattern of operating rate adjustments. Overall, the national electric furnace operating rate this week was 39.82%, up 0.72% MoM.

In east China, the electric furnace operating rate was 46.1%, down 0.6% MoM. Affected by adjustments to critical peak power hours in December, three electric furnace mills in the region reduced operating hours this week. In south China, the operating rate was 54.3%, up 3.7% MoM. The rapid rise in spot rebar prices earlier improved profit margins for local electric furnace mills, coupled with temporary shortages of certain specifications in the market. Under these multiple favorable factors, several electric furnace mills in the region extended operating hours. In central China, the operating rate was 15.5%, flat MoM. Production at electric furnace mills remained stable this week, though overall profitability declined. Future output will be adjusted flexibly based on actual changes in market supply and demand, prices, and other factors. In south-west China, the operating rate was 34.1%, up 0.1% MoM. Influenced by the decline in spot rebar prices this week, profit margins for electric furnace mills narrowed to break-even levels, leading to mixed adjustments in operating rates across the region.

Overall, the fundamental structure of the rebar market has not yet undergone substantial change. Both supply and demand lack core drivers that could significantly influence market trends. Short-term price fluctuations remain primarily sentiment-driven. However, some electric furnace mills have clearly indicated production cut plans for next week. Considering various factors, the national electric furnace operating rate is expected to show a slight downward trend next week.