FOCUS: Chinese rebar supply set to drop amid thinning margins for EAF mills

A declining rebar market in China coupled with elevated prices for scrap have put a squeeze to the profit margins of electric-arc furnace operators in the country since September.

Amid a pessimistic outlook for demand and prices, market participants are expecting these EAF operators - which account for close to a third of the supply of the long steel product in China - to cut their output soon.
EAF mills’ capacity utilization rates are low at the moment because they are on the verge of losses, market participants told Fastmarkets.
For instance, in eastern China’s Jiangsu province, most EAF operators are incurring losses of up to 150 yuan ($21) per tonne during the peak hours of 8am-12pm and 5-9pm, an industry analyst in Shanghai said.
Electricity charges vary throughout the day in China. During the hours of peak electricity consumption, tariffs can be above 60% higher than average, depending on the region.
Conversely, during the “valley hours” of low electricity consumption, rates can fall by as much as half.

In Jiangsu, EAF mills are breaking even during the “average hours”...

Published

Jessica Zong

October 25, 2019

09:32 GMT

Shanghai