China: EAF production retreats further amid maintenance shutdowns

• Improving margins, demand recovery to stabilise production
  
  
• Losses on rebar sales narrow to RMB 40/t from RMB 91/t
  
  

Mysteel Global: Production among Chinese electric-arc-furnace (EAF) steelmakers continued to shrink during the past week due to increased maintenance stoppages among mills in southern regions of the country, Mysteel's latest survey showed.

During 17-23 April, the average capacity utilisation rate among the 94 independent EAF steel producers under Mysteel's tracking dropped for the second straight week by another 0.4 percentage point to reach 61.9%.

Over the same period, the average operational rate of these 94 mills ended an eight-week rise and dipped 0.1 percentage point from the previous week to 74.9%, the survey findings showed.

A few mini-mills in Southwest and South China stopped production to conduct regular maintenance during the past week, the results of Mysteel's survey indicate. This led to a reduction in steel production among the sampled steelmakers of some 3,500 tonnes/day on average.

Nonetheless, some mills lifted production after seeing their operating margins improve throughout the past week, thanks to the strengthening of domestic steel prices, Mysteel Global learnt.

On 23 April, for example, Mysteel assessed China's national spot price for HRB400E 20mm diameter rebar higher by 1.5% on week at RMB 3,392/tonne (t) ($497/t), while the country's composite steel scrap price stood largely stable on week at RMB 2,478/t, both including the 13% VAT.

By the same day, the average loss on rebar sales incurred by the 76 independent EAF steelmakers nationwide under Mysteel's tracking had narrowed to RMB 40/t, significantly smaller than the RMB 91/t recorded a week earlier.

With the mills' margins recovering and domestic steel demand rising steadily, production among mills is expected to pick up, Mysteel Global noted.

As such, overall run rates among domestic EAF steelmakers will likely stop falling and stabilise in the coming week, Mysteel's survey suggests.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.