Steel scrap inventories at the 61 Chinese steel plants including both blast furnace (BF) and electric-arc-furnace (EAF) producers plunged to a two-month low of 2.84 million tonnes as of February 2, according to Mysteel’s latest survey published on the same day.
Compared with January 16, scrap stocks at these mills fell 26.6% or about 1 million tonnes, and the existing stocks will be sufficient for their 15.1 days of consumption based on the present utilization rate, or 5.5 days shorter than in mid-January, according to Mysteel’s latest survey.
Chinese steel plants, dominantly BF operators, have kept producing over the Chinese New Year (CNY) holiday over January 24-February 2, but scrap replenishment has been disrupted because of the festival and the sudden outbreak of the Novel Coronavirus (2019-nCov), Mysteel Global noted.
“Most steel scrap traders and recyclers in China have stopped selling materials now, and transportations and logistics have been affected as many city authorities have suspended public transportation including coaches, trains or some flights to reduce the spread of the virus,” a Shanghai-based scrap analyst said.
At present, only about 255 tonnes of scrap are delivered to the 61 steelmakers under the survey on the daily basis on average, or about 88% lower than the tonnage in a working day before the CNY holiday, he added.
China’s EAF steel mills have shut down the plants during the CNY break, which has usually been the case prior to and during the festival, and as of January 30, the capacity utilization rate among the 53 independent EAF steel mills under Mysteel’s other regular survey, thus, was recorded at 5.88%, or down another 3.36 percentage points from that on January 16.
“Other than the holiday, the virus and the little margin for EAF steelmaking have discouraged EAF mills from resuming production at all,” the Shanghai-based analyst added.
China’s domestic steel scrap prices stayed unchanged over the holiday with the average price 6-8mm common grade steel scrap still at Yuan 2,424/tonne ($346/t) on delivery and excluding the 13% VAT.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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