Average operating rate across Chinese independent electric arc furnaces (EAFs) is expected to increase 5 percentage points from June to stand at 69% in July as decent profits keep steel mills keen to crank up production, we estimates.
As of Wednesday July 11, costs for EAF production came in at 3,628 yuan/mt based on a steel scrap price at 2,020 yuan/mt, tax included, and profits stood at 262 yuan/mt based on Wanji’s offered price in Shanghai market. Profits across China averaged at 100-300 yuan/mt, our research found.
Production at some EAF mills in Guangxi and Guangdong provinces was limited in June when environmental inspectors settled into those two regions. It is expected to recover in July after the inspections ended.
One EAF at Huahong Iron & Steel in Zhejiang Lishui is likely to resume its operation from maintenance from mid-July.
Besides, some EAF mills in central and south-west China planned to increase their production in July.
Separately, limited production is now seen at Wantai in Zhejiang province as its transformer broke down on May 26. It remains unclear when the production would be back to normal.
Ji’an Iron and Steel is now under full suspension as some part of its EAF broke down, which occurred in late-May. The suspension is expected to last for three to four months.