China ferrous scrap prices hit multi-year low

Mysteel Global: Chinese steel scrap prices posted steep drops last week under the heavy pressure of the comparatively more significant decline of finished steel prices, Mysteel's latest survey showed.

As of July 26, China's composite steel scrap price had lost a total of Yuan 99.6/tonne ($13.7/t) on week to reach Yuan 3,667.3/t including the 13% VAT, touching the lowest level since November 3 2020.

By the same day, the country's national spot price for the HRB400E 20mm diameter rebar was assessed by Mysteel at Yuan 3,443/t including the 13% VAT, lower by a large Yuan 123/t from a week earlier.

After the release of the new national standards for hot-rolled rebar, domestic traders have rushed to sell off their rebar stocks under old standards for fear of losing more money on these products, which caused domestic rebar prices to head south rapidly, as Mysteel Global reported.

With their margins being squeezed drastically by weak steel prices, steelmakers vigorously pressed the scrap suppliers to lower selling prices so that they could ease their production costs, market sources observed.

China's leading electric-arc-furnace (EAF) steelmaker Shagang Group announced two rounds of cuts in their steel scrap purchase prices during last week, with the price reduction totalling Yuan 100/t, as reported.

Meanwhile, many steel producers curtailed their production in response to the expanding losses on steel sales, leading the domestic demand for steel scrap to weaken overall, Mysteel's survey showed.

During July 22-26, the daily average consumption of steel scrap among the 300 blast-furnace (BF) and EAF steel mills under Mysteel's tracking dropped by 1.6% on week to 516,360 tonnes/day. Over the same period, the scrap volume arriving at the same 300 mills averaged 535,840 t/d, falling by 1.1% from the previous week.

The steelmakers saw their inventories of steel scrap accumulate amid slower consumption. The total stocks held by the 300 mills Mysteel tracks rose by 2.3% on week to reach 5.2 million tonnes as of July 26. The existing stocks would be sufficient to last these mills 8.9 days at their current usage rate, longer by 0.1 day than the previous period, Mysteel assessed.

Note: This article has been written in accordance with an article exchange agreement between MySteel Global and BigMint.