China qualified yards' scrap stocks up 3.9% m-o-m in June

The total stocks of processed and unprocessed steel scrap held by China's 584 licensed steel scrapyards edged up by 3.9% on month in June, Mysteel's new monthly survey has found. Chiefly responsible for the rise was the scrapyards' determination to hold off selling in response to strengthening scrap prices and steady scrap demand from end-users, survey respondents said.

The scrapyards, all qualified by the country's Ministry of Industry and Information Technology, were holding 1.18 million tonnes of processed and unprocessed scrap by end-June. Within the total, inventories of processed scrap were higher by 2.9% on month at 838,350 tonnes, and those of unprocessed were up by 6.4% on month at 340,200 tonnes, the survey showed.

"The hot and humid weather (across China) last month made outdoor scrap collecting, processing and transporting more difficult," a Shanghai-based market watcher observed. "Therefore, after noting the rise in domestic steel scrap prices as well as steelmakers' steady demand for scrap, most scrapyards have chosen to hold off selling to build up their inventories of the feed material, betting on higher scrap prices in the near term," she explained.

Since mid-June, the better market sentiment together with healthy profit margins among some steel producers encouraged most BF and EAF mills to ramp up production, leading to their firm demand for steel scrap, Mysteel Global noted.

In tandem, Mysteel's latest survey data showed that the BF capacity utilization rate among 247 steel mills nationwide hit its 27-month high of 91.98% by end-June, or up by 2.05 percentage points on month. Meanwhile, the EAF capacity use among 87 independent EAF steelmakers across China under Mysteel's tracking also increased by 1.95 percentage points on month to reach 51.32% as of June 29.

As of June 30, Mysteel's steel scrap price index increased by Yuan 93.4/tonne ($12.9/t) on month to Yuan 2,957.5/t on delivery and including the 13% VAT, according to the database.

Written by Lindsey Liu, liulingxian@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.