China’s domestic steel scrap market experienced a small decrease last week as deliveries to steel mills were on the rise, with Mysteel’s steel scrap price index as of May 29 nudging down by RMB 7.8/MT (USD 1.1/MT) on a week to RMB 2,439.1/MT on delivery to steel plants and the 13% VAT.
Most steelmakers reduced their scrap buying prices last week, following Shagang Group’s decision to clip RMB 30/MT off its procurement prices on May 28.
The price reductions by domestic steelmakers triggered concerns among scrap suppliers and prompted them to speed up their delivery pace in case of further declines.
As of May 29, the daily delivery volume of steel scrap to 15 Chinese steel mills including both blast furnace (BF) and electric-arc-furnace (EAF) producers averaged 5303.3 MT/day, up 17% on week, according to Mysteel’s survey.
Consequently, the uptick in procurement saw steel scrap stocks at the 61 Chinese BF and EAF steel mills Mysteel tracks increase for a third straight week by another 46,800 tonnes or 2.08% on week to 2.3 million tonnes as of May 28 – sufficient to sustain the mills for 11.1 days of consumption, 0.3 day longer than the prior week.
However, market participants predicted that room for further scrap price declines will be limited, as steel mills’ scrap stocks remain relatively low compared with the same period last year. “Overall scrap supply conditions remain tight. On the other hand, some steel mills will have replenishment needs to maintain production in June, now that their profit margins have recovered after the decrease in production costs,” a Shanghai-based market watcher said.
A Jiangsu-based steel scrap trader was cautious. “We’ve decided to take a wait-and-see stance and moderate our deliveries to steel mills to just a low pace,” Mysteel was told.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint Research.
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