China Scrap Price Dips on Weaker Steel Sentiment

China's domestic steel scrap market lost a little ground last week, with Mysteel's steel scrap price index edging down by Yuan 8.5/tonne ($1.2/t) on week to Yuan 2,604.5/t on delivery to steel plants and including the 13% VAT as of November 29.

"The retreat in finished steel prices has cooled steel sentiment, and that led to the downward adjustment in domestic steel scrap prices," a Shanghai-based scrap analyst said Monday.

As of November 29, the average price of HRB400 20mm dia rebar across China had decreased by Yuan 15/t on week to Yuan 4,152/t including the 13% VAT.

Another factor driving Chinese steelmakers to lower their scrap buying prices was the rise in scrap stocks at their works, the analyst added. As a result, some scrap suppliers had accepted the mills' lower procurement price - just to win a sale - which dragged scrap prices lower overall last week, he added.

Shagang Group (Shagang), China's largest electric-arc-furnace (EAF) steelmaker in East China's Jiangsu province, lowered its scrap buying price twice on November 27 and 29 respectively by a total of Yuan 60/t, as reported.

Consequently, as of last Friday market transaction prices of 6-8mm common-grade carbon steel scrap in Zhangjiagang in East China's Jiangsu province had dipped by Yuan 20/t on week to Yuan 2,440/t excluding the VAT.

Over the same survey period, scrap stocks at the 61 Chinese EAF and blast furnace producers Mysteel monitors weekly swelled by 3.45% on week to reach a six-month high of 2.91 million tonnes - sufficient to last the mills 13.4 days of operations, according to Mysteel's latest survey.

Nevertheless, domestic steel scrap prices may not drop much in the near term, another analyst in Shanghai said, explaining that scrap procurement from buyers will remain active over the coming weeks as they build inventory reserves to tide them through winter.

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