China Scrap Price Bottoms Out on 50 Mills' Paying More

China's domestic steel scrap price may have bottomed out, as over 50 steel mills across China including both blast-furnace (BF) and electric-arc-furnace (EAF) producers have agreed to raise their scrap procurement prices by RMB 30-180 (USD 4.3-25.7/MT) to secure supplies, Mysteel Global noted.

As of April 15, Mysteel's steel scrap pricing index recovered 3.8% on day or RMB 11.7/MT on week to RMB 2,235.3/MT including the delivery to mill and the 13% VAT, according to the data.

The continuing recovery in steel sales has lent support to China's finished steel prices, and lower prices in scrap and coke saw Chinese steel mill's profit up. Nowadays, China's BF steel producers may enjoy a gross margin of RMB 400-500/MT in rebar sales and the rebar margin for EAF producers averages RMB 200-300/MT, according to Mysteel's latest survey.

China's national HRB400 20MM dia rebar price, for example, increased by RMB 45/MT on week to RMB 3,635/MT including the 13% VAT.

Better scrap demand and rising prices, on the other hand, enabled many Chinese scrap suppliers to slow down the pace of delivery to mills, anticipating further strengthening in prices.

"We had been in a great rush to delivery earlier on when prices had been softening, but now are not able to refill the stocks," a scrap trader in East China's Anhui province told, admitting that they are more into restocking than selling off nowadays.

As of April 16, steel scrap deliveries to 15 steel mills nationwide under Mysteel's survey declined to about 3,001 MT/day, down 8.5% on day or 37.7% on week. Their steel scrap consumption increased by 4.64% on day to 4,209 MT/d.

China's steel mills have been ramping up their steel output since the end of last month, and as of April 9, the capacity utilization rate among China's 53 independent EAF steelmakers increased for the seventh week by another 2.45 percentage points on week to 49.59%, and the blast furnace capacity utilization among the 247 BF steel mills across China rose for the fifth week by another 1.01 percentage points on week to reach 78.81%, according to Mysteel's latest data.

The Chinese steel mills' daily steel scrap consumption, therefore, has increased, with the daily consumption among the 61 mills with both BF and EAF facilities increased to 2,582 MT/day over April 3-9, up 3.9% on week or having doubled on month, Mysteel's survey shows.

The concern on possible steel oversupply, especially for long steel, however, has not been prevent, as despite the rises, both the EAF and BF mills' capacity utilizations are still way below the 58.08% and 79.65% in early January.

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