China's EAF capacity use declines further to 64.05%

The capacity utilization rate of the 71 independent electric-arc-furnace (EAF) steelmakers under Mysteel's regular survey decreased further for the second week to reach 64.05% on average as of July 29, lower by another 0.6 percentage point on week and hitting a 3.5-month low. The squeeze on power supplies for industrial applications and the central government's order to reduce crude steel output this year led some EAF mills to cut production, sources noted.

After Beijing mandated that crude steel output this year should fall below last year's, several other provinces joined Jiangsu and Shandong in East China in applying pressure to steelmakers to pare output during the rest of 2021. This has made most EAF mills more cautious about ramping up output, Mysteel Global noted.

On the other hand, the ongoing power shortages in Southwest China's Sichuan, Chongqing and Guangxi provinces, as well as South China's Guangdong province, are forcing EAF mills in these areas to halt EAF operations during peak periods or even halt operations totally, according to Mysteel's latest survey.

In tandem, over the past week total steel scrap consumption in Sichuan and Chongqing provinces decreased by 20%, while that in Guangxi and Guangdong fell by around 30%, according to a Shanghai-based market watcher.

Despite the decrease in output, the EAF producers' profits have kept rising, following the uptick in domestic steel prices amid the lower output of both crude and finished steel, Mysteel Global noted.

As of July 30, China's national price of HRB400E 20mm dia rebar under Mysteel's assessment had gained for the fifth week by another Yuan 92/tonne ($14.2/t) on week to Yuan 5,479/t and including the VAT.

In tandem, the margins being secured on rebar among the 18 independent EAF mills under Mysteel's tracking rose too for the fourth week by Yuan 121/t on week to Yuan 437/t on average over the same period.

Written by Lindsey Liu, liulingxian@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.