Chinese mills' steel scrap stocks rebound on high deliveries

Steel scrap inventories held by the 61 Chinese blast furnace (BF) and electric-arc-furnace (EAF) steelmakers under Mysteel's regular survey had ended a five-week drop and rebounded by 3.8% on week to reach 1.76 million tonnes as of August 10, with scrap traders rushing to sell their stocks, Mysteel Global learned.

"The steel scrap inventories increased mainly among mills in East China, where the leading steelmakers made more than one announcement to cut their steel scrap purchase prices last week," a market analyst based in Shanghai observed.

For example, Shagang Group, the country's leading EAF steelmaker headquartered in East China's Jiangsu, had clipped its steel scrap purchase prices twice by a total of Yuan 60/tonne ($8.3/t) including the 13% VAT over August 7-11, as reported.

In tandem, Mysteel's domestic steel scrap price index had also lost Yuan 36.9/t on week to hit Yuan 2,985.9/t including the 13% VAT as of August 11.

"This sparked panic selling among scrap dealers because they feared that the prices might drop further," the analyst explained. "Some steel mills in East China even saw trucks queuing outside their yards waiting to unload scrap cargoes," she added.

As such, during August 4-10, steel scrap deliveries to the 61 sampled BF and EAF mills averaged 2,864 tonnes/day, jumping 295.5 t/d or 11.5% on week, according to Mysteel's tracking.

On the other hand, Chinese steelmakers' daily scrap consumption remained largely stable on week at 2,705 t/d over the same period, up by a tiny 9.5 t/d or 0.35% from the previous week, Mysteel's survey showed.

"A few EAF mills in North and Southwest China restarted production last week, while some mills in East and Central China conducted maintenance stoppages," the Shanghai-based analyst noted.

Under such circumstances, the existing steel scrap inventories held by the 61 sampled steelmakers will be sufficient to last 10.6 days of their use, 0.1 day longer than in the prior week due to the jump in traders' deliveries, according to Mysteel's assessment.

Written by Anthea Shi, shihui@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com

Note: This article has been written in accordance with an agreement between Mysteel and SteelMint