Steel scrap use among China's BF mills nears 10-month high

The volume of steel scrap used by Chinese blast-furnace (BF) steel mills continued rising last week, albeit slightly, with the average scrap consumption ratio against steel production among the 130 BF steelmakers across China under Mysteel's regular survey increasing for the eighth straight week by another 0.11 percentage point on week to 14.45% as of April 6, a new high since June 2022.
In tandem, average daily scrap consumption among these 130 BF mills during the week to April 6 also hovered at a 10-month high of 1.28 million tonnes/day, up by 8,700 t/d on week or 107,600 t/d on month, Mysteel's survey showed.

"Over the past few weeks, some BF mills kept consuming more steel scrap in both their ironmaking and steelmaking processes, because these days upping the scrap ratio is marginally more cost-effective when making steel than consuming hot metal," a Shanghai-based market analyst told Mysteel Global.

By the end of last week, the price of 6-8mm common-grade carbon steel scrap in Zhangjiagang city in East China's Jiangsu had reached Yuan 2,790/tonne ($406/t), while the average cost for producing hot metal also in Jiangsu was higher at Yuan 2,860/t, both excluding the 13% VAT, the data showed.

Though removing the impurities in scrap will add about Yuan 53/t to the cost of steelmaking, the overall cost of producing steel with scrap was still Yuan 17/t cheaper than with hot metal, Mysteel Global calculated.

On the other hand, though recent rains in many regions of China have dampened steel demand, most BF mills still chose to maintain high output in hopes of a steel demand recovery. This led to an increase in these mills' demand for scrap. Mysteel Global noted.

Also, "most Chinese steel mills have little inclination to rein in their output before the government imposes restrictions," the market watcher commented.

The BF capacity utilization rate among the 247 domestic steel mills under Mysteel's other survey had climbed for the 13th week in a row to average 91.2% as of April 6, a new high since June 2021.

Written by Lindsey Liu, liulingxian@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com

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