China: Demolition scrap volumes drop to lowest level in 8 months

• Reduced scrapyard operations, weak demolition activity curb supply
• Falling scrap prices and sluggish steel demand dampen recycling

Mysteel Global: China’s ferrous scrap recycling from construction and demolition sites slumped in October, falling to its lowest level in eight months amid slower scrapyard operations and weakening demolition scrap prices.

During the first three weeks of October, 105 recycling firms collected an average of 12,238 tonnes (t) of demolition scrap per week-down 16% from September and 52% lower year on year. The decline highlights a significant contraction in demolition scrap availability.

Holiday disruptions and weak recovery

Scrapyard activity slowed sharply during the National Day holiday (October 1-8) as many operators halted collection. Even after the break, inflows stayed weak amid falling scrap prices and sluggish steel demand.

Prices and steel production under pressure

Between 1-29 October, China’s national average price of rebar cuttings-steel bars recovered from demolished structures-averaged RMB 2,279/t ($321/t), down 1% m-o-m. Lower prices reflected reduced demand from mills, whose margins have narrowed in recent weeks.

The average blast furnace capacity utilization among 247 steelmakers fell for the fourth consecutive week to 90% as of 23 October, signaling weaker production appetite and less need for scrap replenishment.

Property slowdown restricts scrap generation

China’s weak property sector continued to limit scrap generation, with fewer demolition and clearance projects underway. Newly launched property projects totaled 56 million sq m in September, down 15% y-o-y, restricting fresh scrap supply.

Outlook

Market participants expect demolition scrap flows to remain constrained in the near term unless property activity and steel demand pick up. Softer domestic steel prices and limited construction progress could keep China’s demolition scrap recycling volumes under pressure through the coming months.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.