MONTHLY: China ferrous scrap prices seen nudging up in Nov

China's ferrous scrap prices are poised to increase mildly in November, driven mainly by the shrinking scrap supply against relatively steady demand for the feed material from domestic steelmakers, according to Mysteel's latest report on the market.

The tight balance between scrap supply and demand already underpinned domestic scrap prices last month, which showed more resilience as compared to weakened finished steel prices, Mysteel Global noted.

As of October 31, China's national composite steel scrap price stood at Yuan 2,603.58/tonne ($363.6/t), higher by 3.8% from the end of September, while the country's composite steel price dropped by a marked 4.2% on month to Yuan 3,740.47/t, both including the 13% VAT, according to Mysteel's assessment.

Although domestic scrapyards ramped up their efforts in collecting and processing steel scrap materials, their scrap inventories remained low, Mysteel's survey showed.

By the end of October, the total stocks of processed and unprocessed steel scrap held by the 584 Chinese steel scrapyards qualified by the country's Ministry of Industry and Information Technology sat at 1 million tonnes, hovering around the lowest level since the survey started in late 2022.

The shrinking availability of raw scrap materials generated by steel downstream industries will further restrict the processing volume at scrapyards this month, the report predicts.

On the other hand, steelmakers may be less interested in stepping up production this month since downstream steel demand will likely decline as winter starts to creep in across the country, which means their scrap consumption will also decrease, as reported.

Nevertheless, domestic steel mills are planning to start building up scrap inventories soon to make sure that they have sufficient feed materials to maintain normal production during the winter season, considering that the Chinese New Year holiday for 2025 is earlier than previous years, and scrap trading will largely cease around that time, the report points out.

As such, steelmakers will keep buying scrap materials at a steady pace, which will provide firm support for the scrap prices later this month, the report suggests.

However, the room for price increases will be limited in November, as the traditional slack season for the steel market will make mills more cautious and focused on controlling input costs, the report warns.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.