China's Scrap Price at 2-Months High, Mill Stocks Low

China's scrap price index rose for the fourth week, up another RMB 54.1/MT (USD 7.7/MT) on week to its a two-month high of RMB 2,439.9/MT on delivery to mills and including the 13% VAT as of May 15, according to Mysteel's assessment, as major steelmakers had been willing to pay more for the replenishment of their low scrap stocks at the works.

As of May 14, higher procurement prices saw scrap stocks at the 61 steel mills including both blast furnace (BF) and electric-arc-furnace (EAF) producers rebound by 99,700 tonnes or 4.9% on week to 2.14 million tonnes, though the tonnage was still 30% lower on year, which would be able to sustain the mills for 10.7 days of consumption, 0.2 day longer than the prior week, according to Mysteel's data.

"Last week some Chinese steel producers had been looking for scrap supplies to fulfill their near-term needs, as they had not failed to secure enough supplies in the previous week," a Shanghai-based market watcher commented.

"Higher bidding prices from the Chinese steel mills had enabled them to convince some traders to deliver more, but in general China's availability of scrap has been tight, especially for those premium quality supplies," she added.

As of May 15, the daily delivery volume of steel scrap to 15 Chinese steel mills including both BF and EAF producers averaged at 5,347 MT/day, up 5.1% on day or 21.1% on week, according to Mysteel's latest survey.

Despite the rather promising market situation at present, some market watchers suggested scarp traders to sell off some stocks in the good days as the scrap price runs the danger of losing the solid ground soon after the continuing rises, especially when the price spread between steel scrap and rebar had been narrowing, down another RMB 48/MT on week to about RMB 1,260/MT by May 15.

As of May 15, China's national average price of HRB 400 20mm dia rebar increased by RMB 9/MT on week to RMB 3,691/MT including the 13% VAT, lagging behind the pace of increase in the scrap price, according to Mysteel's assessments.

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