Posted on 16 Nov 2020
Steel scrap prices across China are likely to keep strengthening in the remaining few weeks of 2020, predicted Li Shubin, vice chairman of the China Association of Metalscrap Utilization (CAMU) at the 2020 National Steel Scrap Conference in Haikou in South China’s Hainan province on November 12.
“Earlier this year, the lower scrap generation amid the COVID-19 pandemic nationwide led steel scrap supplies to tighten, which supported domestic scrap prices and kept them at a relatively high level,” Li observed at the conference.
Just this week, Mysteel’s steel scrap index as of November 11 had increased to Yuan 2,679/tonne ($394/t) on delivery and including the 13% VAT from one week earlier to reach the highest level since April 2013, Mysteel’s data shows.
“For the remainder of 2020, I predict that domestic steel scrap prices will experience a similar uptrend and average around Yuan 2,700/t,” Li said at the conference, explaining that increasing scrap demand from steelmakers will lend some support to the price uptick.
Compared to imported iron ore and its persisting high prices, steel scrap continues to have competitive advantages for steel mills, though scrap prices have steadily strengthened recently, Mysteel Global noted.
In order to contain their production costs within an acceptable range, “most steel mills are adding more steel scrap during their steelmaking processes to ensure steady steel output,” Li told his audience.
In addition, with the approach of winter, steel mills in many areas (such as the steel-production hubs of Tangshan and Handan in Hebei province) are being asked to halt upstream facilities such as coke ovens, sinter plants and blast furnaces to reduce air pollution. Li explained that under this situation, steel scrap, as an alternative to iron ore and being an eco-friendly 'green' raw material, will be increasingly consumed by Chinese steel mills to feed their converters and blast furnaces so as to increase crude steel output.
“We believed that scrap prices will keep strong for a while,” a procurement manager from Hebei Iron and Steel Group told Mysteel Global, explaining that his company had lifted scrap procurement prices slightly after China’s National Day holiday break in early October to lock in sufficient fine-quality ferrous scrap resources in advance.
“We did this because the arrival of winter might trigger a tightening of market supplies, should the cold temperatures disrupt scrap collection,” he added.
Written by Lindsey Liu, liulingxian@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
