The stocks of processed and unprocessed steel scrap held by the 406 licensed steel scrapyards across China decreased during January, declining for the second month by another 7.9% from December, Mysteel’s monthly survey has found. Chiefly responsible for the fall was active procurement among domestic steelmakers and the decisions of some scrap suppliers to suspend work early before the Chinese New Year (CNY) holiday.
By the end of January, the scrap yards – all qualified by the country’s Ministry of Industry and Information – were holding 1.17 million tonnes of processed and unprocessed scrap. Within the total, inventories of steel processed scrap were lower by 8.2% on month at 852,600 tonnes, while those of unprocessed were down by 6.9% on month at 316,700 tonnes, the survey showed.
Since late December, many Chinese steel mills had been actively stocking up raw materials, especially iron ore and steel scrap, to ensure uninterrupted production over the CNY holiday break, Mysteel Global noted.
Another factor behind the decline of the scrapyards’ stocks last month was a decrease in recycling and processing activities in the market. “We noted that employees with many scrap firms left work early for their hometowns to avoid the public transport congestion,” a Shanghai-based market watcher remarked. “This forced some yards to halt their scrap collecting and processing activities, which in turn resulted in the reduced supply of steel scrap,” she explained.
Not only scrap processors, many Chinese independent electric-arc-furnace (EAF) steelmakers also opted to cease melting operations and enjoy the week-long holiday.
In tandem, by the end of January the capacity utilization rate of 71 EAF steelmakers under Mysteel’s tracking nationwide had dropped to 10.05%. And during the CNY break, the capacity use edged down further to only 1.65% as of February 2, or a new low since February 2020, according to the database.
Consequently, total steel scrap consumption among the 61 steel mills Mysteel samples nationwide (including both blast furnace and EAF plants) totaled 5.37 million tonnes last month, down 3.5% on month or 21.6% on year, another survey result showed.
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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