Chinese BF mills' Jul scrap feeds steady at 15%

Steel scrap consumption among the 130 blast-furnace (BF) steelmakers across China stayed at a reasonable level of 14.93% throughout July, or up a tiny 0.18 percentage point on month, though the scrap utilization ratio in steelmaking among the 32 steel mills in North China was higher at 19.09%, according to Mysteel's regular survey.

Higher scrap utilization among the steel mills in North China had to do with the fact that local scrap supply had not been as per normal, while steel mills' output has been rising on the anticipation of better demand and higher steel prices, according to the latest survey.

The rebar price in Beijing, for example, was assessed at Yuan 3,720/tonne ($531/t) including the 13% VAT as of July 31, and the price spread between rebar prices in Beijing and Shanghai was Yuan 80/t, higher by Yuan 30/t by May 30, which was before the Wet season, Mysteel's data shows.

"In July, some Chinese BF steel mills continued to consume more steel scrap to take advantage of the rather stable steel scrap prices, and the others were prompted to use more scrap in steelmaking as it was more cost effective when iron ore prices had surged to a rather high level," a Shanghai-based market watcher explained.

As of August 4, Mysteel'snational steel scrap pricing index edged up by Yuan 33.9/tonne on month to Yuan 2,542.1/t including delivery, while Mysteel's PORTDEX 62% Fe Australian Fines index rose by Yuan 115/wmt on month to its new one-year high of Yuan 905/wmt FOT Qingdao, both including the 13% VAT, Mysteel's data shows.

In August, steel scrap utilization in China's steelmaking may remain stable or inch up, as logistics in East and South China will be freed from any disruption of rainfalls or flooding, and scrap stocks among the 130 surveyed BF steel mills already saw arecovery of 8.5% on month to 2.38 million tonnes as of July 31, according to Mysteel's survey.

Besides, Chinese steel mills may again be in a spree of production on the anticipation of domestic steel demand recovery this month, though, this may lead to the rises in domestically-produced steel scrap price too, just as what is happening in the global scrap market, according to the market sources.

However, China's current scrap prices have already been at a relatively high level, and the room for further price rise should be limited, they warned, suggesting steel scrap traders to be realistic in lifting their prices and grab the opportunities of sales when the bookings come in.

Meanwhile, China's spot transaction price of the 6-8mm common-grade carbon steel scrap in Zhangjiagang stayed at a half-year high of Yuan 2,390/t excluding the VAT as of August 4.

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