WEEKLY: Rise in China EAF production slows down

During March 8-14, the average capacity utilization rate among the 87 independent EAF mills under Mysteel's regular tracking rose for the fourth consecutive week by another 3.3 percentage points on week to reach 51.6%, while their operational rates averaged 68.82%, up by 5.63 percentage points on week.

The arrival of warmer weather in local regions led steel mills in Northeast China to finally start resuming operations after their Chinese New Year holidays this week, according to Mysteel's survey. Meanwhile, a few mills in East and Southeast China also ended their holiday breaks and restarted production, the survey showed.

However, some EAF mills in South, East and Southwest China decided to reduce or suspend their production in the face of weak demand from steel users, Mysteel Global learned.

During March 11-14, the total trading volume of construction steel comprising rebar, wire rod, and bar-in-coil among the 237 Chinese trading houses under Mysteel's tracking averaged 106,925 tonnes/day, lower by a huge 35.4% compared with the same period last year.

The slack steel demand has caused domestic steel prices to drop rapidly in recent weeks and led steelmakers to frequently suffer negative margins. For example, as of March 14, the average loss on their sales of construction steel products incurred by the 33 independent EAF mills under Mysteel's survey stood at Yuan 74/t.

Consequently, steelmakers have generally attempted to cut their steel scrap purchase prices to shave their production costs, as reported. By March 14, China's national steel scrap price index was assessed by Mysteel at Yuan 2,894.8/t including the 13% VAT, lower by Yuan 101.2/t or 3.4% on week.

Written by Anthea Shi, shihui@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com