The stocks of processed and unprocessed steel scrap held by the 293 licensed steel scrapyards in China decreased for a second month during February, tumbling by 12.3% from January. Mainly responsible for the decrease were the active procurement among steelmakers building stocks ahead of the Chinese New Year (CNY) holiday and the slower resumption of work at these yards after the holiday break, according to Mysteel’s latest survey.
The scrap yards, all qualified by the country’s Ministry of Industry and Information Technology, were holding 1.11 million tonnes of processed and unprocessed scrap by end-February. Within the total, inventories of processed scrap were lower by 15% on month at 689,800 tonnes, and those of unprocessed were down by 7.4% on month at 423,800 tonnes, the survey showed.
“The resurgence of COVID-19 cases across China before the CNY holiday added uncertainties to the post-holiday steel market, so most scrapyards endeavoured to sell their scrap stocks at hand as much as they could before the holiday to avoid possible further price declines or a bearish market later,” a Shanghai-based market watcher responsible for the survey explained.
“Moreover, domestic steel mills also actively procured steel scrap before the holiday to ensure that they would have enough to maintain normal production during the CNY break,” she added.
Even though the CNY holiday officially ended on February 17, most scrapyards had not fully returned to work until the Lantern Festival on February 26. Consequently, the slower rate of steel scrap collecting and processing among these yards resulted in the decrease in their scrap stocks, the survey showed.
However, the decline in domestic scrapyards’ steel scrap stocks fell short of market expectations, as some scrapyards which returned to work earlier after the CNY holiday have held off selling. They’re savouring the bullishness of the post-holiday steel market and steelmakers’ robust demand, Mysteel Global noted.
“We didn’t expect that the domestic steel market would revive so fast. We’re a bit sorry that we sold too much of our stocks before the holiday,” an official from a scrapyard in East China’s Zhejiang province commented.
“Over the past week, both blast and electric-arc-furnace steelmakers have raised their scrap buying prices accordingly to attract more deliveries. However, we’ve also had to pay more to our scrap suppliers to collect scrap materials, and the steel scrap we can secure now is limited. So we are focusing more on building our own scrap inventories instead of selling,” he added.
Written by Lindsey Liu, liulingxian@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Leave a Reply