Posted on 21 Aug 2020
The volume of steel scrap used by Chinese mills including both blast furnace (BF) and electric-arc-furnace (EAF) producers rose further last week, with the daily consumption of scrap at the 61 steel works Mysteel monitors across China increasing for a sixth week by another 3.65% on week to reach this year’s high of 3,385 tonnes/day as of August 13, according to Mysteel’s latest survey.
In tandem, as of the same day the total stocks of steel scrap at the 61 surveyed mills had decreased for a second week by another 56,200 tonnes or 2.2% on week to reach a one-month low of 2.5 million tonnes – sufficient to sustain these mills for 11.4 days of consumption, 0.1 day shorter than the prior week.
“Thanks to the recent strengthening of finished steel prices, the margins being earned by both BF and EAF mills have recovered, encouraging the makers to step up operations,” a Shanghai-based market source commented.
As of August 13, the blast furnace capacity utilization rate among the 247 steel mills under Mysteel’s survey inched up for the fourth week to hit 95.16%, or a new high since the survey samples were updated in January 2019. The capacity utilization rate of the 71 independent EAF steelmakers across China also increased by 0.3 percentage point on week to 57%.
Among the BF mills especially, to maximize their gains while maintaining their current high production the integrated mills are choosing to use more scrap, now that prices are more competitive than iron ore, Mysteel Global noted.
For example, as of August 18 Mysteel’s steel scrap price index stayed unchanged for a fifth day at Yuan 3,555/tonne ($365/t) on delivery. On the other hand, as of August 18, Mysteel’s PORTDEX 62% Fe Australian fines price had increased by Yuan 378/wmt on week to reach Yuan 963/wmt FOT Qingdao, a new high since August 14, 2013, as reported. This rapid surge in imported iron ore prices against the stable scrap prices have made domestic scrap far more attractive to steelmakers, Mysteel Global noted.
Meanwhile, as of August 18, Mysteel’s national average price for HRB 400 20mm dia rebar had increased by Yuan 14/t on week to Yuan 3,852/t. Consequently, the price spread between rebar and steel scrap had expanded to Yuan 1,317.2/t, up Yuan 7.3/t on week or by Yuan 47/t on month, Mysteel’s data shows.
The improved steel prices and profit margins have encouraged domestic steelmakers to consume more scrap for production. The firm demand and decreasing stocks at mills are also likely to lend support to domestic scrap prices and keep them stable for the near term, Mysteel Global noted.
Written by Lindsey Liu, liulingxian@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
