China: Scrap prices surge in Mar’26 amid supply constraints

• Low inventories and tight supply push prices higher
• Gradual supply recovery expected as scrap processing resumes

Mysteel: China’s ferrous scrap market remains tight after inventories fell to multi-year lows in January-February due to weak processing and holiday disruptions. Despite a modest recovery in March, stocks remain below last year, while scrap inflows stay subdued. Prices have risen 2.6% to around RMB 2,496/t ($362/t), supporting gradual supply recovery.

Scrap inventories hit multi-year low

China’s steel scrap inventories dropped to a 3.5-year low, with scrapyard inventories declining sharply toward the end of February. Although inventories rebounded by 3.7% by second week of March, they remained 4.5% lower y-o-y, hovering around the lowest level since July’22, indicating continued supply-side constraints.

Holiday impact keeps supply tight

Extended Chinese New Year shutdowns and delayed resumption by scrap processors disrupted collection activity, leading to a slower supply recovery. Many yards liquidated inventories ahead of the holiday, tightening availability. Meanwhile, scrap arrivals at mills averaged 0.47 mnt/day in mid-March, down 5% y-o-y, keeping mills under raw material pressure and driving higher procurement.

Rising prices support supply recovery

Domestic scrap prices have strengthened, rising 2.6% since end-February to RMB 2,496/t ($362/t), including 13% VAT. The price increase is expected to encourage scrapyards to ramp up collection and processing, although supply recovery is likely to remain gradual in the near term.

Market outlook

China’s ferrous scrap market is expected to remain firm in the near term, supported by tight supply and stronger procurement from steelmakers. Upstream sentiment is gradually improving, as rising prices are encouraging scrapyards to resume collection and processing, though recovery may remain slow. Meanwhile, downstream sentiment remains cautious, with a gradual recovery in steel demand likely to limit aggressive price increases.

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