WEEKLY: China's ferrous scrap prices seen staying rangebound

Mysteel Global: After experiencing steep rises earlier this month, Chinese ferrous scrap prices have started to retreat as the optimism previously observed in the market has tempered, Mysteel's data showed. Nevertheless, the prices are still supported by firm scrap demand from steelmakers, respondents to Mysteel's latest survey said.

On October 10, Mysteel's assessment of the country's composite steel scrap price touched a two-month high of Yuan 2,636.4/tonne ($372.6/t) including the 13% VAT, before subsequently declining by Yuan 32.9/t or 1.2% to reach Yuan 2,603.5/t as of October 12. Saturday was a substitute workday for China's National Day holiday over October 1-7.

Domestic scrap prices posted marked rises early last week, driven by robust demand from steelmakers replenishing the feed materials they had consumed during the holiday, according to Mysteel's survey.

Over October 8-12, the total volume of steel scrap arriving at the 300 blast-furnace (BF) and electric-arc-furnace (EAF) steelmakers under Mysteel's regular tracking averaged 535,299 tonnes/day, higher by a significant 13.3% from that in the week prior to the break.

As of October 12, the total inventories of steel scrap piled at these 300 mills' yards had also increased, rising by 5.2% from the pre-holiday level to reach 5.1 million tonnes, the survey findings showed.

The mills had also accelerated their scrap procurement to meet their growing need for feeds for immediate production, as both BF and EAF steelmakers were expediting their output to chase the healthy profits available now, Mysteel Global noted.

Over October 8-12, the consumption of steel scrap among the same 300 mills averaged 498,114 t/d, higher by 6.7% from the end of September, according to Mysteel's tracking.

"Scrap prices may continue to pull back as sentiment is softening, but the decline will be limited," a market analyst based in Shanghai said. "The steelmakers are eager to keep their run-rates high and this will keep the demand for scrap strong," he explained, adding that "this may soon provide upward momentum for the prices again."

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