【EAF Steel】May Market May Show a First Rise Then Decline

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【EAF Steel】May Market May Show a First Rise Then Decline

After the holiday, China's overall ferrous metal market has risen. Some construction sites that were previously on the sidelines have started restocking, and market trading sentiment has improved. Some traders are showing a willingness to hold back sales and support prices, providing short-term price support. As of May 7, the average price of rebar in China was 3,353 yuan, up 58 yuan compared with the end of last week.

On the raw material side, the May Day holiday affected scrap steel supply in China. After the holiday, many steel mills raised prices to replenish inventories. The average scrap steel procurement price for EAF (electric arc furnace) steel mills increased by 15 yuan compared with last week to 2,185 yuan/ton (tax excluded). Costs and profits of EAF steel mills have both slightly rebounded. According to SMM Information, as of May 7, the capacity utilization rate of 135 EAF steel mills in China was 49.69%, down 1.45% from last week, and the daily output of EAF steel was 327,000 tons.

As the Middle East situation moves closer to a ceasefire agreement, the premium in bulk commodities may gradually weaken in the future, and the price center of steel products may shift downward. At the same time, China's issuance of new special-purpose bonds in April was only 174.4 billion yuan, showing a significant slowdown compared with the first two months, and liquidity conditions may tighten marginally in May. It is expected that China's steel market in May may show a pattern of first rising and then declining, and EAF steel mills will continue to face certain pressure in production and sales.

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