Posted on 22 Mar 2021
The profit margins that China’s independent electric-arc-furnace (EAF) steelmakers are earning on their steel are improving, largely because domestic steel prices are rising faster than prices of steel scrap, Mysteel’s latest survey has found. The fatter margins are encouraging more mini-mills to beef up production, survey respondents said.
As of March 18, the average steel production cost of the 18 independent EAF mills which Mysteel tracks across China had decreased by Yuan 13/tonne ($2/t) on week to Yuan 4,385/t. This dip in costs saw the profit margins of these 18 surveyed mills average Yuan 260/t during the March 12-18 week, up Yuan 17/t on week, Mysteel’s survey showed.
“Over the past week, the increase in domestic rebar prices, for example, has outpaced the rise in steel scrap prices, which in turn helped most EAF mills’ profit margins improve,” a Shanghai-based market watcher told Mysteel Global.
As of March 18, Mysteel’s steel scrap price index had only gained by Yuan 10.6/t on week to reach Yuan 3,267.2/t, while Mysteel’s national average price for HRB 400 20mm dia rebar increased by Yuan 44/t on week to Yuan 3,731/t, both including the 13% VAT.
Consequently, as of March 18 the price spread between rebar and steel scrap had expanded to Yuan 1,482.43/t, up Yuan 32.75/t on week, according to Mysteel’s database.
On the other hand, “domestic steel scrap traders have continued to deliver scrap to mills at a steady pace. It’s not just the healthy profit margins but also the sufficient stocks that have encouraged more EAF steel mills to ramp up operations,” she added.
As of March 18, the average operational rate of the 71 independent EAF mills Mysteel monitored nationwide had edged up by another 6.72 percentage points on week to reach 68.86%, Mysteel’s other survey showed.
Source:Mysteel Global
