Chinese steel scrap prices hit over 7.5-years high

Mysteel's steel scrap price index increased by another Yuan 24.8/tonne ($3.8/t) on week to Yuan 2,718.6/t on delivery and including the 13% VAT as of November 27, a new high since April 2013. The steelmakers' continuing firm demand for raw materials was what drove the price to rise, market sources said.

"Despite the volatility of domestic steel prices recently, most steel mills can still enjoy some profits, and that's encouraging them to keep their production steady," a Mysteel analyst responsible for the latest weekly survey said.

As of November 26, the average capacity utilization rate among the 71 independent electric-arc-furnace (EAF) steelmakers sampled in the survey increased for the third week, rising by another 0.55 percentage point on week or 1.58 percentage points on month to 59.48%.

On the other hand, Shagang Group (Shagang), the country's largest EAF steelmaker in East China's Jiangsu province, raised its steel scrap buying prices by Yuan 50/t effective from November 26, as reported. Shagang's decision also gave a confidence boost to the scrap market and helped domestic scrap prices keep strengthening, Mysteel Global noted.

Shagang's rise was mirrored by other mills hoping to attract more deliveries, with the result that total steel scrap stocks at the 61 Chinese steel plants Mysteel monitors weekly edged up by another 24,900 tonnes to 3.03 million tonnes as of November 26.

"China's domestic steelmakers are keen to stock up inventories, not only for their near-term production, but also to have sufficient set aside for the winter season," she added.

As of November 27, China's HRB 400 20mm dia rebar price, an indicator of market movement, still hovered high at Yuan 4,113/t including the VAT, Mysteel's data shows, even though the price had slipped by Yuan 61/t on week.

Written by Lindsey Liu, liulingxian@mysteel.com

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

Photo: World Steel