Mysteel: Chinese prices for ferrous scrap are expected to keep tracking downward in April, dragged by a potential decline in scrap demand among steelmakers as well as dim sentiment in the domestic ferrous market, according to Mysteel’s latest report on the market.
The country’s steel scrap prices declined throughout March, with the national composite prices falling 3% on month to sit at RMB 2,479/t ($339/t) including the 13% VAT by 31 March, Mysteel assessed. So far this month, the price slid further to RMB 2,428/t ($331/t) by 8 April.
Despite weakening prices, China’s steel scrap remained more costly than hot metal as a steelmaking raw material, prompting blast furnace (BF) steel producers to reduce their use of scrap materials, as reported.
As of April 8, for example, the cost of steelmaking with steel scrap among integrated mills in East China’s Jiangsu province averaged RMB 2,163/t ($295/t) excluding the 13% VAT, higher by some RMB 94/t ($13/t) than using hot metal, according to Mysteel’s assessment.
“The price gap between steel scrap and hot metal is expected to become wider in the foreseeable future, so scrap consumption at BF mills will likely drop further,” the report predicts.
Meanwhile, most electric-arc-furnace (EAF) steel mills in China are struggling with losses on selling their products. As such, some mini-mills may scale back production in April, suggesting their weaker demand for steel scrap going forward, according to the report.
Mysteel’s survey indicated that the 64 sampled independent EAF mills across China were incurring an average loss of RMB 94/t ($13/t) on selling rebar.
In addition to the shrinking demand, market worries over macroeconomic conditions intensified following the sweeping “reciprocal tariffs” initiated by the US, which have also weighed on China’s ferrous market and contributed to price declines of steelmaking raw materials including steel scrap, Mysteel’s report warned.
Nevertheless, the scrap price fall in April is unlikely to be significant since domestic steel demand in its typical peak season will still be resilient and underpin steel prices, which in turn could provide some momentum for raw materials, according to the report.
On the other hand, the persistently tight availability of steel scrap will continue to lend support to the prices, Mysteel’s survey suggests. By 4 April, the total inventories of processed and unprocessed steel scrap held by the 584 scrapyards qualified by China’s Ministry of Industry and Information Technology were 930,920 t, hovering around the lowest level since October 2022, according to Mysteel’s tracking.
Note: This article has been written in accordance with a content exchange agreement between Mysteel and BigMint.
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