China's scrap prices hover high amid low stocks

China's domestic steel scrap prices stayed high over the week of August 29-September 4, increasing by another Yuan 12.3/tonne ($1.8/t) on week to reach Yuan 2,606.8/t on delivery and including the 13% VAT and refreshing its nine-month high. Respondents to Mysteel's latest survey attributed the firm market to mills' steady consumption and the rather low scrap availability.

As of September 3, steel scrap stocks at the 61 Chinese blast furnace (BF) and electric-arc-furnace (EAF) steel plants which Mysteel monitors weekly fell for a fifth straight week, slipping by another 15,900 tonnes or 0.65% on week to 2.44 million tonnes, a new eight-week low. This was sufficient to last the mills for 11.3 days at their present daily rate of consumption, or 0.2 day longer than the previous week.

Over the same survey period, steel scrap deliveries to the surveyed 61 steel mills averaged 3,101 tonnes/day as of September 3, down 3.2% on week, Mysteel's data shows.

"Some domestic steel mills had to pay more to compete for scrap deliveries, or they may not be able to secure sufficient volume," a market watcher from Jiangsu commented.

For example, Shagang Group (Shagang), China's largest electric-arc-furnace steelmaker in East China's Jiangsu province, raised its steel scrap buying prices by Yuan 50/t on September 4, only one week after the mil lifted its buying prices by the same Yuan 50/t on August 25, as reported.

Although the concessions made by some mills to pay higher prices has encouraged some scrap traders to speed up their pace of scrap deliveries, scrap availability across China still remains tight, mainly as growing demand from steelmakers has almost outpaced supply, Mysteel Global noted.

Consequently, some steel mills with low stocks had no choice but to reduce scrap usage in the steelmaking process.

As of September 3, scrap consumption among the 61 steel mills had nudged down by 0.86 percentage point on week to Yuan 3,320 t/d, still at this year's high level, Mysteel Global notes.

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