The stocks of processed and unprocessed steel scrap held by the 293 licensed steel scrapyards in China decreased for a third month during March, shrinking by 11.3% on month, according to Mysteel’s latest survey. Chiefly responsible for the decrease was the dealers’ faster pace of delivering scrap to mills, survey respondents suggested.
As of March 26, the yards – all of which are qualified by the country’s Ministry of Industry and Information Technology – were holding 987,800 tonnes of processed and unprocessed scrap. Within the total, inventories of processed scrap were lower by 12.3% on month at 604,900 tonnes, and those of unprocessed were down by 9.7% from February at 383,000 tonnes, the survey showed.
“Thanks to the fast recovery of the domestic steel market, earlier this month many steelmakers raised their scrap procurement prices to attract deliveries – both for stock replenishment and for their normal production,” a Shanghai-based market watcher explained. Consequently, scrapyards held off selling and focussed instead on recycling and processing, waiting for scrap prices to move upward further, he told Mysteel Global.
Meanwhile, the tougher production curbs in Tangshan in North China’s Hebei province fuelled market concerns about domestic steel market conditions going forward. The fluctuations in raw materials prices and the significant decrease in Tangshan steelmakers’ daily scrap consumption forced scrap traders to speed up their pace of deliveries to mills outside Hebei, in case of further price declines, the survey found.
Nevertheless, the recent surge in finished steel prices has bolstered the steelmakers’ profit margins and encouraged the mills to ramp up production. It’s likely that in the next month, the robust scrap demand from mills will see the scrapyards’ stocks decline further.
As of March 25, the capacity utilization rate of the 71 independent electric-arc-furnace mills Mysteel checks across China had increased for a fifth week, rising by another 3.79 percentage points on week to 70.55%.
As of March 30, China’s HRB 400 20mm dia rebar price, an indicator of steel market sentiment, had increased by Yuan 140/tonne ($21.3/t) on week to hit a 9.5-month high of Yuan 4,911/t, according to the database. Mysteel’s steel scrap price index dipped slightly by Yuan 0.6/t on week to Yuan 3,248.2/t, both including the 13% VAT.
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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