China’s 289 licensed steel scrapyards posted a 25% on-month recovery in their processed steel scrap stocks and a nearly 30% on-month growth in their unprocessed materials by May 22, as they have been stocking up actively on the robust demand from the Chinese steel mills, according to Mysteel’s latest survey.
As of May 22, processed scrap totalled 778,400 tonnes and unprocessed added up to 1.23 million tonnes among these scrapyards that have passed the qualification checks by the country’s Ministry of Industry and Information Technology.
China’s scrap consumption and prices have been on the rise since the start of May, as Chinese steel mills have been consuming more scrap in steelmaking on their higher steel margins, which has encouraged the domestic scrapyards to collect and process as much, Mysteel Global learned from market sources.
“Most of the 289 scrapyards are operating and at close to their full capacities too to meet the demand from the domestic steel mills,” a Shanghai-based market source commented.
Despite that China’s steel scrap pricing index gained RMB 149.4/MT (USD 21.3/MT) in total on a month to RMB 2,451.8/MT including the 13% VAT as of May 26, according to Mysteel’s assessment, steel margins average Yuan 200-300/t for the Chinese blast-furnace steel producers or RMB 50-100/MT for the electric-arc-furnace (EAF) producers thanks to the recent strengthening in domestic steel prices, market sources noted.
Chinese steel mills, especially the BF producers, have been chasing higher steel output, and as of May 23, daily scrap consumption at the 61 EAF and BF producers with the majority being BF mills grew 2.8% on a week or 12.4% on month to the year’s high of 3,048 tonnes/day, according to Mysteel’s latest market survey.
Meanwhile, some of the yards have been holding onto their stocks, waiting for higher prices, as the rainy season in East and South China usually disrupts scrap collection, separation and recycling, so the social supply will ease starting June, Mysteel Global understands.
High scrap stocks and resources for recycling, however, may be a double-edge sword, imposing downward pressure on scrap prices in the near term should China’s steel consumption be affected by heavy rainfalls, some market sources warn.
“With the upcoming of the rainy season, outdoor construction activities especially in East and South China may be disturbed, which will lower demand for steel and steel scrap in turn,” a market source from East China’s Jiangsu pointed out.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint Research.
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