Fluctuations in the operating rates of short-process steel mills and the imbalance between scrap steel supply and demand constrain capacity release.

The operating rate of the short-process steelmaking industry has recently fluctuated frequently, with the overall operating level lower than the average of the same period in previous years, gradually exposing the industry's development constraints. The root cause lies in the imbalance between supply and demand of upstream scrap steel resources and persistently high production costs. Simultaneously, periodic fluctuations in end-user demand have significantly increased the production and operational pressure on short-process steel mills, resulting in lower overall profitability compared to long-process steel mills.

The shortage of scrap steel raw materials is becoming increasingly prominent. Currently, scrap steel recycling channels are obstructed, leading to a significant reduction in the volume of scrap plant dismantling, equipment scrapping, and old steel recycling, resulting in insufficient total scrap steel resources circulating in the market. This supply shortage of recycled resources has directly driven up scrap steel market prices, causing raw material procurement costs for short-process steel mills to rise continuously. Compared to long-process steelmaking, their cost advantage has completely disappeared, forcing some small short-process enterprises to reduce production and undergo maintenance.

Furthermore, while short-process steel mills offer greater production flexibility than long-process steel mills, their product range is more limited, primarily focusing on construction steel-related categories, with a relatively low proportion of industrial plate production capacity. In the current market environment where demand for steel plates outpaces that for building materials, short-process steel mills have been unable to adjust their product structures in a timely manner, missing out on the benefits of increased steel demand in the manufacturing sector. Coupled with stringent environmental regulations on emissions and solid waste treatment for short-process enterprises, their operating costs have further increased.

In response to the industry's predicament, relevant industry organizations have proposed optimization suggestions. On the one hand, they suggest improving the scrap steel recycling system and expanding recycling channels to alleviate the shortage of scrap steel resources. On the other hand, they recommend guiding short-process steel mills to increase investment in technological research and development, enrich their product categories, and enter the markets for specialty steels and industrial steel plates. In the long run, short-process steelmaking has a prominent low-carbon attribute, aligning with the industry's green development direction, and still possesses broad development prospects.