WEEKLY: China EAF production stabilizes, but sales losses widen
During March 15-21, the average capacity utilization rate among the 87 independent EAF mills under Mysteel's regular tracking was generally unchanged on week at 51.88%, picking up by just 0.28 percentage point from the prior week. Over the same period, the operational rates among these mills averaged 70.7%, higher by 1.88 percentage points on week.
The arrival of warmer weather in local regions led more steelmakers in Northeast China to restart operations after their Chinese New Year holidays this week, while some mills in central China resumed work after completing their routine maintenance, Mysteel Global learned.
Meanwhile, the marked recovery in steel demand from the construction industry also encouraged the mills to lift production further, market sources observed.
On March 21, the daily trading volume of construction steel comprising rebar, wire rod, and bar-in-coil among the 237 Chinese trading houses under Mysteel's tracking totalled 167,901 tonnes, higher by a substantial 74,302 tonnes or 79.4% on week.
However, their losses on steel sales still forced some mills to scale back output, even though their production costs have eased overall, Mysteel Global noted.
As of March 21, for example, the average loss on selling construction steel products incurred by the 34 independent EAF steelmakers under Mysteel's other survey was Yuan 88/tonne ($12.3/t), wider than the Yuan 74/t recorded last week.
In response to the persistently negative margins, the steelmakers continue to press steel scrap suppliers to reduce their selling prices, Mysteel Global learned.
As a result, China's national steel scrap price index was assessed by Mysteel at Yuan 2,799.6/t including the 13% VAT as of March 21, lower by Yuan 95.2/t or 3.2% on week.
Written by Anthea Shi, shihui@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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