The Operating Rate Of 34 Electric Furnace Steel Mills Picked Up

According to SMM research, as of June 20, the operating rate of 34 electric furnace steel mills that mainly produce rebar rested at 36.76%, a month-on-month increase of 1,18%, and the capacity utilization rate was 40.77%, a month-on-month increase of 1.04%. The average daily output of rebar stood at 72,600 mt, an increase of 1,900 mt from the previous month.

During the survey period (June 14th to June 20th), steel prices retraced down from the highest point, and the profits of steel mills mostly remained above or below the break-even line. High temperature and rainy weather greatly dented terminal demand. Considering conditions of sales and profits, the enthusiasm of steel mills was average during the week, and the operating rate of electric arc furnaces rose slightly by 1.18 percentage points to 36.76%.

In terms of different regions, in East China, the price of finished products dropped. Owing to water accumulation in the rainy season on the construction site, the sales of finished products decreased. However, the current profit loss of steel mills was not large, and there was still production momentum. This week, the operating rate increased by 2.2 percentage points to 40%. In South China, the profit of steel mills swung from negative 50 yuan/mt to positive 50 yuan/mt, and the scale of losses narrowed. This week, the operating rate rose slightly by 0.6 percentage points to about 49%. In Central China, some steel mills reported that the current infrastructure projects in Henan were acceptable, driving certain demand for steel, thereby leading the operating rate to hike by 1.7 percentage points to 21%. In Southwest China, the profit of steel mills remained stable, and the supply of scrap steel continued to be tight, which restricted production. The operating rate remained at 34% this week.

Looking at the follow-up, the demand for finished products entered the off-season, and the supply of scrap steel appeared tight. It was difficult for steel mills to expand their profits. Under the influence of various factors, there was no room for electric arc furnace steel mills to hike production. There will be no plan to reduce production in the short term, and it is expected that the operating rate will remain stable next week.