The stocks of processed and unprocessed steel scrap held by China’s 291 licensed steel scrapyards had reversed up by 3.5% on month as of December 25, according to Mysteel’s latest survey. Chiefly responsible for the recovery were an increase in processing activity and the scrapyards’ determination to hold off selling in response to strengthening scrap prices.
As of December 25, the scrap yards – all qualified by the country’s Ministry of Industry and Information – were holding 1.3 million tonnes of processed and unprocessed scrap, some 3.5% higher from end-November and reversing two months of declines. Within the total, inventories of steel processed scrap were higher by 7.9% on month at 822,800 tonnes, while those of unprocessed were down by 3.2% on month at 484,100 tonnes, the survey showed.
“Cold weather this month has made scrap collecting and processing more difficult, which partly explains the decrease in unprocessed scrap stocks,” a Shanghai-based market watcher told Mysteel Global. “Meanwhile, thanks to the recovery in finished steel prices and steelmakers’ robust demand for steel scrap, most scrapyards have sped up their scrap processing activities to meet the steel plants’ firm demand,” she added.
The total of steel scrap consumed among the 61 steel mills Mysteel samples nationwide including both blast furnace and electric-arc-furnace (EAF) plants reached 6.74 million tonnes as of December 25, up 7% on month, another survey showed.
“Although steel prices began to show signs of softening in late December, some EAF producers can still enjoy margins of over Yuan 300/tonne ($46/t) on rebars. Besides, though scrap prices are still hovering at multi-year highs, compared to the rather higher prices of other raw materials such as iron ore and coke, scrap is still popular among domestic steelmakers,” the Shanghai-based market watcher said.
An official from Shagang Group, China’s largest EAF steelmaker in East China’s Jiangsu province, admitted that availability is tight. “We are still actively trying to attract more scrap materials, as we’re running our EAFs at relatively high capacity while the profits remain healthy.”
In view of the steelmakers’ robust demand and tightening scrap supply amid this week’s sudden cold and snowy weather, some scrapyards have begun to hold off selling, Mysteel Global noted. Instead, they’re stocking up inventories at hand to hopefully secure more profits in the near term.
As of December 29, China’s HRB 400 20mm dia rebar price, an indicator of steel market sentiment, had increased by Yuan 270/t ($41.4/t) on week to Yuan 4,369/t. And Mysteel’s scrap index also increased by Yuan 106.9/t on week to Yuan 2,826.6/t, both including the 13% VAT, according to Mysteel’s assessment.
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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