China's qualified yards' scrap stocks down 6.4% m-o-m in Sept'21

The stocks of processed and unprocessed steel scrap held by the 293 licensed steel scrapyards in China decreased for the second month during September, falling by another 6.4% on month, Mysteel's latest monthly survey has found. The scrap traders' faster pace of selling scrap to mills was largely behind the decline, respondents said.

As of September 30, the scrap yards - all qualified by the country's Ministry of Industry and Information Technology - were holding 934,900 tonnes of processed and unprocessed scrap. Within the total, inventories of processed scrap were lower by 5.9% on month at 612,700 tonnes, and those of unprocessed were down by 7.3% on month to 322,200 tonnes, the survey showed.

In September, the further reduction in output among Chinese steelmakers including both blast-furnace (BF) and electric-arc-furnace (EAF) producers further fuelled market concerns about the domestic steel market outlook, Mysteel Global noted. The production cuts were in response to Beijing's orders to trim crude steel output, and to power supply shortages or power rationing in many regions of China, as reported.

It was these uncertainties, together with cooling market sentiment, which forced most scrap traders to take a fast-in-and-out stance, not daring to hold too much scrap at hand, according to a Shanghai-based market watcher.

In fact, by the end of September, the blast furnace capacity utilization rate among the 247 steel mills Mysteel samples had fallen to a two-year low of 78.69%, down 6.44 percentage points on month, while average capacity utilization among the 71 sampled independent EAF producers also decreased to a seven-month low of 44.13%, down 17.03 percentage points on month, according to Mysteel's assessment.

The lower capacity utilization among the domestic steel mills saw total steel scrap consumption among the 61 BF and EAF mills Mysteel samples nationwide decrease for the fourth straight month in September, falling by another 12.5% on month or by 11.6% on year to 5.48 million tonnes in total, Mysteel's other survey showed.

Written by Lindsey Liu, liulingxian@mysteel.com

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