China ferrous scrap prices refresh 4-year low

Mysteel Global: Chinese steel scrap prices dropped significantly last week, pressured by the heavy pessimism in the market and the firm stance of domestic steelmakers to pare their buying prices lower, Mysteel's latest survey showed.

As of August 16, China's composite steel scrap price had fallen by a large Yuan 192.1/tonne ($26.8/t) or 7.5% on week to reach Yuan 2,377.1/t including the 13% VAT, the lowest level since May 6 2020, according to Mysteel's assessment.

"The slumps we've seen in ferrous derivatives prices of late caused bearish sentiment in the steel scrap market to intensify last week," a market analyst based in Shanghai said.

Meanwhile, the severe losses that steelmakers are suffering on steel sales prompted more mills to press their steel scrap suppliers to reduce selling prices, hoping to reduce their operating costs, the analyst added.

For example, China's largest EAF steelmaker, Shagang Group, cut its steel scrap buying prices twice in the same week last week, with the total price reduction on all grades reaching Yuan 140/t, as reported.

The frequent price reductions further triggered panic selling among scrap suppliers, Mysteel Global noted. During August 12-16, the total volume of steel scrap arriving at the 300 blast furnace (BF) and electric-arc-furnace (EAF) steelmakers under Mysteel's tracking averaged 497,720 tonnes/day, higher by 3.6% on week.

Over the same period, the daily average consumption of steel scrap by these sampled 300 mills grew by only 1.4% from the previous week to reach 475,120 t/d, the survey results showed.

"Contributing most to the increase in scrap use last week were EAF steelmakers in North China after many resumed production following maintenance stoppages," the Shanghai analyst explained.

As the pace of scrap deliveries from suppliers remained faster than the mills' consumption, steelmakers have watched their inventories continue to accumulate, Mysteel Global noted.

As of August 16, the steel scrap stocks held by the 300 BF and EAF mills under Mysteel's tracking had mounted by 3.3% on week to total 5.4 million tonnes - sufficient to last them for 9.3 days at their current usage rate, longer by 0.2 day from the previous period, according to Mysteel's assessment.

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