China qualified yards' scrap stocks remain stable in July
The stocks of scrap held by China’s 406 licensed steel scrap yards remained largely stable in July, nudging down by a tiny 0.5% on month, as both scrap demand a...
The stocks of scrap held by China's 406 licensed steel scrap yards remained largely stable in July, nudging down by a tiny 0.5% on month, as both scrap demand and supply remained weak during the past month, according to Mysteel's monthly survey.
By end-July, the scrapyards, all qualified by the country's Ministry of Industry and Information, were holding a total of 891,100 tonnes of processed and unprocessed ferrous scrap. Within the total, inventories of processed scrap were higher by 0.5% on month at 675,200 tonnes, and those of unprocessed were down by 3.4% on month at 215,900 tonnes, the survey showed.
"Bearish sentiment prevailed in the domestic steel market last month, with finished steel prices steadily declining, squeezing most steelmakers' profit margins or adding to their losses," a Shanghai-based market watcher commented.
Consequently, most mills chose to rein in output to avoid losses, causing them to consume less scrap and weakening their appetite for purchasing scrap from scrapyards, according to her.
For example, by end-July, total scrap consumption among the 61 Chinese blast furnace and electric-arc-furnace producers under Mysteel's regular survey had fallen to this year's new low of 4.24 million tonnes, down by 19% from June.
In line with the weakening steel prices and the steelmakers' lower scrap demand, domestic steel scrap prices also experienced sharp falls. This panicked scrap traders and prompted some to speed up deliveries to their steelmaker customers to limit their exposure to pricing risks, Mysteel's monthly survey showed.
Besides the scrap traders' rush to make deliveries, outdoor scrap recycling and processing activities slowed as summer temperatures soared. This also led to a decline in yard stocks among ferrous scrap dealers, Mysteel Global noted.
As of July 29, Mysteel's steel scrap price index had edged down by Yuan 540/tonne ($80/t) on month to Yuan 2,835.9/t, while Mysteel's national price of HRB400E 20mm dia rebar decreased too by Yuan 200/t to Yuan 4,187/t, both including the 13% VAT, according to the database.
Written by Lindsey Liu, liulingxian@mysteel.com
Edited by Zhenqi Yang, yangzhenqi@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
