Chinese steel scrap traders remain generally optimistic about demand for scrap among domestic steel mills in the near term, especially when many steelmakers are still displaying a healthy appetite for feeds to maintain their production, Mysteel Global has learned. They say that mills are still enjoying healthy margins on their products and that they’ll need to replenish their raw mats stocks soon to carry them through winter and next year’s Chinese New Year holiday over February 11-17.
“The mills’ demand for steel scrap remains strong. Also, some have already shown their willingness to procure by raising buying prices. That’s why we are planning to adjust our pace of scrap deliveries to mills to achieve the highest sales prices possible and maximize our margins,” a scrap trader in East China’s Jiangsu province explained.
Over the week of December 14-16, over 30 steelmakers nationwide raised their scrap buying prices in a range of Yuan 20-70/tonne ($3-10.7/t), according to Mysteel’s regular survey.
Steel scrap supply tends to tighten up in winter because the drop in temperatures makes collecting and processing scrap more difficult. In addition, the heavy snow prevailing in some regions such as Central and Southwest China has dampened local logistics, which also had some impact on scrap supply, Mysteel Global noted.
Consequently, some traders will be more conscious of their pace of procurement and sales. Demand from many steel mills including both electric-arc-furnace (EAF) and blast furnace (BF) producers has been robust recently when average margins across their product catalogues have been relatively high at around Yuan 200/t.
As of December 15, daily steel scrap deliveries to 15 domestic BF and EAF mills under Mysteel’s regular survey averaged 5,033.3 tonnes/day, down 14.8% on week. On the other hand, daily scrap consumption among these 15 mills averaged 5,466.7 t/d, up 6.6% on week, the data shows.
As of December 10, the capacity utilization rate of the 71 independent EAF steelmakers across China which Mysteel monitors increased for a fifth week, rising by 0.41 percentage point on week or 2.83 percentage points on month to 61.35%.
Written by Lindsey Liu, liulingxian@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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