China’s steel scrap market strengthened slightly over the past month, with Mysteel’s scrap price index edging up by Yuan 20.9/tonne ($3/t) on month to Yuan 2602.6/t on delivery and including the 13% VAT as of December 4, Mysteel’s data show. However, the substantial slump in domestic steel prices since the end of November, a consequence of shrinking end-user steel demand, will likely see domestic scrap prices stay rangebound this month, market sources said on Thursday.
Domestic finished steel prices stayed strong in November, with Mysteel’s national average price for HRB400 20mm dia rebar increasing by Yuan 232/t on month to reach Yuan 4,091/t including the VAT as of December 4.
However, with temperatures already either at or below freezing in many parts of the country, domestic steel demand is certain to soften in the coming winter months, a certainty showing itself already in the retreat of rebar prices. Since November 26, Mysteel’s rebar price had declined for seven successive working days by a total of Yuan 105/t, Mysteel Global notes.
Moreover, the softening of scrap prices hasn’t run out of momentum yet either, industry watchers warned.
“The recent plunge in finished steel prices has forced us to be very cautious about keeping our production costs in check, mainly from the aspect of our raw materials purchasing,” admitted an official from an independent electric-arc-furnace plant in East China’s Jiangsu province.
Shagang Group (Shagang), China’s largest EAF steelmaker, lowered its scrap procurement price by total of Yuan 60/t on November 27 and 29, as reported.
“But I believe there is still room for Shagang’s scrap price to drop further, as its demand for steel scrap is likely to stay steady, and its steel scrap consumption is higher than that of other mills,” a Shanghai-based market watcher said.
However, many scrap traders may attempt to combat the price slump by holding off on tabling offers amid their growing difficulties collecting and recycling scrap, both of which are largely undertaken outdoors in China and so are impacted by winter’s cold, Mysteel Global notes.
“Significant decreases in scrap buying prices are rather unacceptable to suppliers, and some have already stood on the sidelines to await a price recovery,” the market watcher added. Therefore, any near-term declines in China’s steel scrap prices are likely to be limited, he predicted.
This article has been published under an article exchange agreement between Mysteel Global & SteelMint.
Leave a Reply