Many Chinese steel scrap traders were optimistic on scrap demand among the Chinese steel mills in the coming winter days, especially when many steelmakers are still having a healthy appetite for scrap to maintain their production pace now amid their healthy margins and they will need to replenish some volume before the Chinese New Year (CNY) holiday over January 24-30 2020.
“Some steel mills have already shown interest in purchasing steel scrap by raising their procurement prices, and accordingly, we are planning to adjust our pace of scrap deliveries to mills just to maximize our margins by achieving the highest sales prices possible,” a scrap trader in East China’s Jiangxi province said.
Over December 9-12, 29 steelmakers agreed to raise their steel scrap procurement prices by a range of Yuan 10-60/tonne ($1.4-8.6/t), according to Mysteel’s latest survey.
Steel scrap supply tends to tighten up in the winter days because of the growing difficulty in collection amid dropping temperatures, so some traders will be conscious of their procurement and sales paces, while demand from many steel mills including both electric-arc-furnace (EAF) and blast furnace (BF) producers have been robust recently when their margins at a relatively high level of Yuan 150-500/t.
As of December 12, Mysteel’s steel scrap price index reached Yuan 2,587.5/t including the 13% VAT, nudging down by Yuan 15.1/t on week, Mysteel’s data shows.
It is a common practice for the Chinese steel mills to stock steelmaking raw materials including scrap ahead of the CNY holiday, as trading and logistics are usually disrupted or even come to a standstill during the holiday, the most important holiday for the Chinese citizens, Mysteel Global understands.
As of December 5, the blast furnace capacity utilization rate among the 247 BF steelmakers across China increased by 1.06 percentage points on week or 2.13 percentage points on year to hit its nearly three-month high of 80.94%, and the steelmaking capacity utilization rate among the 53 independent EAF producers also up 2.45 percentage points on week or 3.51 percentage points on year to its four-month high of 62.06%, according to Mysteel’s surveys.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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