The stocks of processed and unprocessed steel scrap held by the 406 licensed steel scrapyards across China ended four months of declines during December, reversing up by 9.2% on month, Mysteel’s latest monthly survey has found. Chiefly responsible for the recovery was the scrapyards’ determination to hold off selling in response to strengthening scrap prices, survey respondents said.
As of December 31, the scrap yards – all qualified by the country’s Ministry of Industry and Information – were holding 1.27 million tonnes of processed and unprocessed scrap. Within the total, inventories of steel processed scrap were higher by 16.8% on month at 929,200 tonnes, while those of unprocessed were down by 7.2% on month at 340,100 tonnes, the survey showed.
“The cold weather last month made scrap collecting and processing more difficult, which partly explains the decrease in unprocessed scrap stocks,” a Shanghai-based market watcher explained. “Meanwhile, thanks to the recovery in domestic steel scrap prices and the steelmakers’ robust demand for steel scrap, most scrapyards have sped up their scrap processing activities to meet the mills’ firm demand,” she told Mysteel Global.
In tandem, scrap consumption among the nationwide 61 steel firms under Mysteel’s regular survey including both blast-furnace (BF) and electric-arc-furnace (EAF) producers increased by 7.8% from November to reach 5.56 million tonnes in total last month.
Moreover, after entering December, some steel mills, especially those in East and South China, have gradually purchased additional scrap tonnage for replenishment – both to tide them through winter and for the upcoming Chinese New Year holiday – with some even raising their buying prices higher to attract more deliveries, as reported.
Consequently, in view of the mills’ firm demand and tightening scrap supply amid this the recent cold 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 31, Mysteel’s steel scrap price index had edged up by Yuan 300/tonne ($47.1/t) on month to Yuan 3,562.3/t on delivery and including the 13% VAT, according to the database.
Written by Lindsey Liu, liulingxian@mysteel.com
This article has been published under an exchange agreement between MySteel Global and SteelMint.
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