Steel scrap stocks at qualified China yards up 4% m-o-m

The stocks of processed and unprocessed steel scrap held by China's 288 licensed steel scrapyards had grown by 3.9% on-month as of August 24, reflecting the improved availability of scrap thanks to increased recycling activity and larger amounts of return being generated, especially in the country's auto-manufacturing base in eastern China, according to Mysteel's latest survey.

As of August 24, the scrap yards - all qualified by the country's Ministry of Industry and Information Technology - were holding 803,330 tonnes of processed steel scrap, up by a tiny 0.6% on month. However, the tonnage yet to be processed had leapt by 9.3% on month to 533,500 tonnes, the survey showed.

Stock levels have picked up largely due to the eased supply tightness among scrap collectors and recyclers in East China. For example, the total volume of steel scrap held by 110 qualified scrap yards in East China had surged by 29% on month, the largest increase among all regions the survey sampled.

"With the end of the rainy season, we observed a significant recovery of steel scrap materials from local suppliers. Also, the high temperatures are having little impact on the scrap processing industry overall. The relatively high scrap prices have encouraged scrap collecting and processing companies to ramp up production," a Shanghai-based market analyst told Mysteel Global.

On the other hand, China's scrap consumption has been at a relatively high level, as Chinese steel mills have been consuming more scrap in steelmaking when the high iron ore prices made steel scrap more attractive to steel mills as a raw material.

As of August 24, steel scrap consumption this month among the 61 Chinese blast furnace (BF) and electric-arc-furnace (EAF) steelmakers quizzed for another Mysteel survey has increased to 6 million tonnes, up 5.3% on month or 7.9% on year.

Consequently, many scrapyards began to collect and process as much scrap as they can to accommodate the uptick in sales. "We are operating at close to full capacity to meet the demand from the domestic steel mills. We're now in wait-and-see mode just to see whether scrap prices will edge up further," an official from a large-sized scrapyard in East China's Zhejiang province commented.

As of August 25, Mysteel's steel scrap price index had increased by Yuan 33.2/tonne ($4.7/t) on month to Yuan 2,581.6/t on delivery, while Mysteel's PORTDEX 62% Fe Australian Fines price had gained Yuan 93/wmt on month to Yuan 952/wmt FOT Qingdao, both including the 13% VAT, Mysteel's data shows.

This article has been published under an article exchange agreement between Mysteel global and Steelmint Research.