China Steel Scrap Price Up on Lower Mills' Stocks

China's composite steel scrap price index reversed up though by merely Yuan 5.1/tonne ($0.7/t) on week to Yuan 2,581.7/t on delivery to mills and including the 13% VAT as of November 1, and scrap stocks at the 61 sampled domestic steel mills reversed down over the period, which may suggest the tightening in supply and steel mills' reluctance to consume scrap on higher prices, according to Mysteel's latest weekly survey.

Last week, steelmakers from different regions of China adjusted their steel scrap procurement prices up according to their own stock situations, Mysteel Global noted, and as of November 1, Mysteel's spot transaction prices of 6-8mm common-grade carbon steel scrap in Zhangjiagang city, East China's Jiangsu province, increased by Yuan 10/t on week to Yuan 2,420/t excluding the VAT.

As of October 31, total steel scrap at the sampled mills comprising both blast-furnace and electric-arc-furnace makers, fell by 3.6% or 95,400 tonnes on week to 2.55 million tonnes, while it would be sufficient for their 12.1 days of consumption at the present daily consumption rate, only 0.7 day shorter than the previous week.

"The recovery in domestic finished steel prices lent some support to the domestic scrap price," a Shanghai-based analyst said.

China's national average benchmark price for HRB 400 20mm dia rebar recovered by Yuan 27/t on week to Yuan 3,852/t including the 13% VAT as of November 1.

China's steel scrap price has been hovering at a comparatively high level as against much lower steel prices, in comparison with their respective levels a year ago, and the Chinese steel mills have been selective in raw materials amid their thinning steel margins, according to Mysteel's database.

He predicted that the scrap price to still hover high in the coming weeks despite less demand from steel mills as scrap availability will shrink amid dropping temperatures.

Amid smaller appetite for scrap among the Chinese steel mills, scrap suppliers are reluctant to deliver too much quantity either.

"We prefer to take a more cautious approach in today's market, as it is tough for us to buy more scrap materials from the local collectors given the usual seasonal dip in availability," a steel scrap trader from Jiangxi province said.

~Inputs from Mysteel Daily