Posted on 17 Nov 2021
As of November 15, the average steel margins on rebar among China's 18 independent electric-arc-furnace (EAF) producers under Mysteel's tracking declined for the fourth week by another Yuan 170/tonne ($26.7/t) to an over one-month low of Yuan 190/tonne ($30/t), mainly due to the drags by the persistently falling domestic steel prices.
"Average profits still suggest profitmaking, but in reality, it varies by region," a Shanghai-based market watcher told Mysteel Global, as "EAF makers in regions such as North, Northwest and Northeast China are already into losses recently," she added.
The decrease in steel demand and bearish market sentiment in November, the winter month in China, has led to continuing softening in China's domestic steel prices, and steel mills including EAF producers, have been propelled to cut down on their steel output with thinning profits or losses even though production costs had come down too, Mysteel Global noted.
As of November 15, China's national price of HRB400 20mm dia rebar, for example, had been on the downtrend since xx and having lost another Yuan 236/t on week to Yuan 4,759/t, which was steeper than the weekly decline of Yuan 186.2/t in the domestic steel scrap price index to Yuan 3,334.4/t, both including the 13% VAT and according to Mysteel's assessment.
Steelmaking capacity utilization rate among China's 71 EAF mills nationwide under Mysteel's survey, thus, reversed from two weeks of inclines, down 2.16 percentage points on week to 50.99% as of November 11.
Not only EAF mills, those blast-furnace (BF) mills that consuming both steel scrap and iron ore in steelmaking have been more cautious in raw materials procurement among margins declines, and recent iron ore price declines have also serioulsy compromised the pricing competitiveness of scrap against iron ore, Mysteel Global noted.
By the end of last week, the price advantage of steel scrap against molten ore at the steel mills in East China's Jiangsu province enlarged to Yuan 50/t, and the price spread between rebar and steel scrap narrowed by Yuan 38/t on week to Yuan 1,437.8/t as of November 15, according to Mysteel's data.
Over November 5-12, daily scrap consumption among China's 61 BF and EAF mills, thus, dipped accordingly by 1.4% on week to 2,847 t/d on average.
Source:Mysteel Global
