China’s domestic steel scrap market weakened over the week of November 11-15, with Mysteel’s steel scrap price index decreasing by Yuan 20.4/tonne ($2.9/t) on week to Yuan 2,582.2/t on delivery to steel plants and including the 13% VAT as of November 15. Prices have softened because scrap traders and collectors have hiked their delivery volumes to steel mills, with the result that mill stocks have risen, weakening prices.
Accordingly, as of November 15 the spot market transaction price of 6-8mm common carbon steel scrap in East China’s Zhangjiagang city, the country’s top scrap consumption base, had lost Yuan 30/t on week to reach Yuan 2,410/t excluding the VAT, Mysteel’s database shows.
“Shagang’s decision to cut its steel scrap buying prices weakened scrap market sentiment last week, particularly in East China, as many steelmakers followed Shagang’s lead and decreased their procurement prices too,” a market watcher in Shanghai said.
Twice last week, on November 11 and 13, Shagang Group cut a total of Yuan 60/t from its buying price for HMS grade scrap, taking this to Yuan 2,790-2,840/t on delivery and including the VAT, as reported. Shagang Group, located in Zhangjiagang, is China’s largest electric-arc-furnace (EAF) steelmaker.
“EAF steelmakers are now focusing on consuming their stocks at hand – with little interest in procuring more,” the Shanghai market source added.
His comment was borne out by the results of Mysteel’s weekly survey on steel scrap stocks at 61 steel plants that operate both blast furnaces and EAFs. The latest survey showed that as of November 14, their total scrap stocks had increased by another 6.3% or 165,900 tonnes on week to hit a five-month high of 2.79 million tonnes. The volume would be sufficient to last the steelmakers 13.43 days of consumption, or 0.73 day longer than a week ago.
The continuous decline in prices of other raw materials such as iron ore has meant that scrap prices will become less attractive, thus prices will likely stay rangebound in the near term, Mysteel Global was told.
This article has been published under an article exchange agreement between Mysteel Global & SteelMint Research
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