Posted on 07 Jul 2021
The profit margins that China’s independent electric-arc-furnace (EAF) steelmakers are earning on their steel continue to be dragged down by rises in production costs and the continuous decrease in finished steel prices.
Mysteel’s latest survey shows that as of July 1, the margins that the 18 independent EAF producers sampled nationwide are earning averaged Yuan 33/tonne ($5.1/t) last week, down another Yuan 40/t on week.
The summer slump in steel demand is causing domestic steel prices to continue to soften, the survey findings show. This is squeezing the mills’ profit margins and forcing some to reduce output, rather than lose money.
On the other hand, as the weather has made it harder for scrapyards to collect, sort, and process scrap, the resulting limits on domestic scrap supply have kept scrap prices stable.
As of July 1, China’s national price of HRB400E 20mm dia rebar under Mysteel’s survey had softened by another Yuan 19/t on week to Yuan 4,949/t, while Mysteel’s steel scrap price index had nudged up by Yuan 1.7/t on week to Yuan 3,702.5/t, both including the 13% VAT.
The divergence of finished steel and scrap prices in China led the production costs of these 18 surveyed mills to increase by Yuan 25/t on week to average Yuan 4,856/t over the week, according to Mysteel’s assessment.
In tandem, the capacity utilization rate of the 71 EAF mills Mysteel monitors decreased for the third week, slipping by another 3.75 percentage points on week to 65.57% as of July 1, a four-month low, Mysteel’s data shows.
Source:Mysteel Global
