The stocks of steel scrap held by China’s 293 licensed steel scrap yards decreased during January, edging down by 2.9% on month. Chiefly responsible for the decrease was active procurement among domestic steelmakers and the decisions of some scrap suppliers to suspend work early before the Chinese New Year (CNY) holiday, according to Mysteel’s latest survey.
As of January 28, the scrap yards – all qualified by the country’s Ministry of Industry and Information Technology – were holding 1.27 million tonnes of processed and unprocessed steel scrap. Within the total, inventories of processed scrap were lower by 14% on month at 811,500 tonnes, and those of unprocessed were down by 5.5% on month at 457,400 tonnes, the survey showed.
Since late December, many Chinese steel mills have been actively stocking up raw materials, especially iron ore and steel scrap, to ensure uninterrupted production over the CNY holiday break, Mysteel Global noted.
Moreover, though domestic steel prices have been rangebound due to weakening steel demand before the break, some steelmakers can still enjoy healthy profit margins, and this is encouraging them to maintain high steel output. It was these mills’ robust steel output that led to the decrease of scrap stocks at yards, Mysteel Global learned from the survey.
Last month, total steel scrap consumption among the 61 steel mills Mysteel samples nationwide including both blast furnace and electric-arc-furnace plants totalled 6.84 million tonnes as of January 29, up 1.4% on month or by a huge 87.1% on year, another survey result showed.
Another factor behind the decline of the scrap merchants’ stocks last month was a decrease in recycling and processing activities in the market. “We noted that employees with many scrap firms across the country have left work early for their hometowns to avoid the public transport congestion,” a Shanghai-based market watcher remarked. “This forced some yards to halt their scrap collecting and processing activities, which in turn resulted in the reduced supply of steel scrap,” she told Mysteel Global.
Besides, although some steel mills have completed their replenishment requirements, some mills have kept purchasing steel scrap, as they are optimistic about the domestic steel market after the CNY holiday. As a result, steel scrap stocks held by the licensed scrapyards are likely to edge down further this month.
Written by Lindsey Liu, liulingxian@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Photo: World Steel Association
Leave a Reply