By end-December, the scrapyards, all qualified by the country’s Ministry of Industry and Information, were holding some 1.18 million tonnes of processed and unprocessed ferrous scrap. Within the total, inventories of processed scrap were higher by 2.9% on month at 845,860 tonnes, and those of unprocessed were down by 6.9% on month at 338,531 tonnes, the survey showed.
Besides the seasonal supply tightness in domestic scrap availability, the upsurge in COVID-19 infections nationwide since late December also impacted steel scrap processing and collecting activities, further amplifying the existing supply strains, Mysteel Global noted.
On the other hand, Chinese steel mills were also cautious about building up their winter stocks last month, according to the survey.
“Unlike before, the enthusiasm of domestic mills for accumulating scrap inventories for winter has largely cooled this time, as the makers were challenged by their thin margins, softening steel demand from end-users, and their tight cashflow conditions,” a Shanghai-based market watcher commented.
For example, Mysteel’s other survey on 211 blast furnace and electric-arc-furnace (EAF) producers nationwide showed that their steel scrap stocks totalled 3.81 million tonnes as of December 30, lower by a huge 44.3% from the same month in 2021.
Moreover, thinning margins and losses have also prompted some EAF mills to switch off their furnaces well in advance of the Chinese New Year holiday (over January 21-27), leading to a further decline in scrap demand, Mysteel Global noted.
As of December 29, the capacity utilization rate among the 85 EAF mills under Mysteel’s other survey had edged down by 3.9 percentage points on week or 8.22 percentage points on month to 44.76%, a new low since August 2022, the data showed.
For scrapyards, the wide-spreading positive cases for COVID and other uncertainties regarding scrap demand in January forced some dealers to choose a fast-in-and-out attitude to selling to keep their scrap stocks at a low level, so as to avoid risks and losses as much as possible, Mysteel Global noted.
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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