China's EAF output drops further, margin losses expand

Mysteel Global: More electric-arc-furnace (EAF) steelmakers in China reduced or even halted production this week as the losses they were suffering on steel sales worsened, Mysteel's latest survey showed.

During 30 May 30-5 June 2025, the average capacity utilization rate among the 90 independent EAF steel producers under Mysteel's regular tracking decreased for the third straight week by another 0.3 percentage point on week to 58.7%, while their operational rate decreased by 1.1 percentage points from the previous week to 76.7%.

Some mini-mills in East China's Anhui, Central China's Hubei, and South China's Guangdong suspended production to start maintenance during the week, causing a reduction of around 4,800 tonnes/day in the total output of the sampled mills, Mysteel's survey showed.

A mill in Southwest China's Guangxi restarted production on June 1 after completing an overhaul, but it soon halted operations again on 3 June due to an equipment failure, Mysteel Global learned.

The weak performance of steel prices deepened the losses incurred by steelmakers, forcing EAF mills to scale back production, according to survey respondents.

On 3 June, for example, China's national spot price for HRB400E 20mm diameter rebar was assessed by Mysteel at Yuan 3,202/tonne ($445.7/t) including the 13% VAT, the lowest since November 2016. By June 5 however, the price had recovered mildly to Yuan 3,215/t, the data show.

Also as of June 5, the loss on rebar sales reported by the 68 independent EAF steelmakers under Mysteel's other tracking averaged Yuan 132/t, larger than the Yuan 127/t recorded a week earlier.

Notably, mills in Northeast China were enduring an average loss of Yuan 180/t, while those in South China saw their loss expand to Yuan 272/t, as the tightness of scrap materials in local areas underpinned scrap prices and kept the mills' production costs high, according to the survey.

Faced with their severe margin losses, more mills are planning to reduce their working hours and take other steps to ease their financial pain, the survey findings showed. For example, next week some mills in Southwest China's Guangxi will stop production and conduct maintenance for around 15 days, Mysteel Global learned.

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