June saw steel scrap utilization in crude steel produced by the 211 Chinese steel mills Mysteel regularly samples edge down further on month, dropping by another 3.2 percentage points from May to average 18%. The survey samples integrated and electric-arc-furnace (EAF) producers, as well as those mills using both blast furnace (BF) and EAF technologies.
As of end-June, these 211 surveyed mills held 4.06 million tonnes of steel scrap in inventories, or lower by 346,600 tonnes or 7.9% on month. Their total scrap consumption during June also decreased by 1.6 million tonnes on month to 9.18 million tonnes, the survey showed.
Last month’s hot and rainy weather across much of the country saw Chinese demand for finished steel soften, which dampened domestic steel-market sentiment and caused prices to slump. Most steelmakers’ profit margins on producing steel were eroded by the plunge in prices, forcing them to rein in output, which in turn led to the decrease in their scrap consumption, Mysteel Global noted.
For example, by June 30, the capacity utilization rate among the 247 Chinese BF mills under Mysteel’s survey had decreased by 1.65 percentage points on month to a two-month low of 87.61%. Mysteel’s other survey of 85 independent EAF makers showed that their capacity use declined to a four-month low of 35.59%, lower by a huge 20.28 percentage points on month.
In tandem, average steel scrap utilization last month among the 130 blast furnace mills Mysteel samples decreased to a new low for this year of 12.72% – equivalent to nearly 5.02 million tonnes of scrap in volume – which was lower by 2.51 percentage points, or 823,300 tonnes compared with May.
Also by the end of last month, average steel scrap consumption among the 57 sampled EAF mills had nudged down by 0.2 percentage point on month to 96.42%, with the volume decreasing by 565,200 tonnes or 19.6% on month to 2.32 million tonnes, the survey found.
Besides the mills hosting only BFs or EAFs, the 24 mills operating both technologies for steelmaking used 21.38% of scrap in their steel melts in June, also decreasing by 1.47 percentage points on month.
Written by Lindsey Liu, liulingxian@mysteel.com
This article has been published in accordance with an article exchange agreement between Mysteel Global and SteelMint.
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