China: Steel scrap price firm despite rising stocks

China's domestic steel scrap prices appeared resilient over January 29-February 5 as Mysteel's national steel scrap pricing index nudged down by Yuan 6.9/tonne ($1.1/t) on week to Yuan 3,060.5/t on delivery and including the 13% VAT as of February 5, indicating little concern on the scarcity in spot transactions with the approach of the Chinese New Year (CNY) holiday, Mysteel Global learned the market sources.

"The domestic steel scrap market is grinding towards a still in the last few days of the CNY holiday," a Shanghai-based market watcher remarked, as "many electric-arc-furnace (EAF) mills and steel scrap traders are all excusing themselves earlier from the market to have a longer CNY holiday break," she added. China's official CNY holiday runs over February 11-17.

Steel scrap stocks at the 61 Chinese EAF and blast furnace (BF) producers under Mysteel's weekly survey, thus, grew for the seventh week on lower consumption and steady bookings earlier on, up another 58,200 tonnes or 0.9% on week to 4.92 million tonnes as of February 4, a new high since Mysteel launched the survey in June 2017, which will be sufficient for 20.3 days of their consumption, or 0.7 day longer on week, as their daily steel scrap consumption subsided by 5.4% on week to 3,364 tonnes/day on average.

With only a few days to the CNY holiday and the sufficient stocks, only some BF mills are still booking for more deliveries as most of them will maintain normal operations during the CNY holiday, and steel scrap deliveries to these 61 steelmakers under Mysteel's regular survey, thus, went down 25.1% on week to about 3,506 t/d, and according to Mysteel's database.

In the near term, with both buyers and sellers being away from the market, China's steel scrap prices are expected to be rangebound, Mysteel Global understands.

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