China's scrap utilization ratio falls further in Sept'21

Steel scrap utilization in the crude steel produced by 211 Chinese steel mills sampled in Mysteel's regular survey decreased for the fourth straight month in September, shrinking by another 3.39 percentage points from August to 22.33% on average. The survey samples integrated and electric-arc-furnace (EAF) producers, as well as those mills using both blast-furnace (BF) and EAF technologies.

As of end-September, these 211 surveyed mills held 6.34 million tonnes of steel scrap in inventory, some 345,200 tonnes higher on month, the survey showed. Their total steel scarp consumption during September plunged by 3.2 million tonnes on month to 13.5 million tonnes.

Scrap use in domestic steel output declined mainly because of the decrease in usage among integrated mills last month, the results indicated.

Among the total, scrap utilization in crude steel output among the 130 mills with only BFs averaged 16.74% last month, or equivalent to about 7.1 million tonnes of steel scrap, which was1.2 million tonnes less than in August.

For the 24 mills with both BFs and EAFs, their scrap use in steel output averaged 22.39% in September or totalling 2.2 million tonnes, down 735,900 tonnes on month, Mysteel's data showed.

The reduction in scrap use in Chinese steel production mainly reflected the fact that the domestic mills were curtailing steel output last month amid Beijing's order to rein in production till year's end, and because of power shortages or power rationing in many regions, according to the survey.

Consequently, the steelmakers' reduced appetite for scrap caused domestic steel scrap prices decrease too in September, with Mysteel's steel scrap price index edging down by Yuan 29.2/tonne ($4.5/t) on month to Yuan 3,715.8/t on delivery and including the 13% VAT as of September 30, according to the database.

Written by Lindsey Liu, liulingxian@mysteel.com

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