Posted on 10 Dec 2020
Domestic prices of steel scrap across China might be hovering at a near eight-year but the country’s scrap traders are not celebrating. The profits they’re earning are being squeezed because as winter takes hold across the country’s eastern and northern provinces, scrap collection is becoming more difficult, supply is tightening and collectors are charging more, which the traders reluctantly have to pay so as to meet the domestic steelmakers’ robust demand, market watchers commented Wednesday.
As of December 8, Mysteel’s steel scrap price index had refreshed its multi-year high of Yuan 2,736.3/t ($419.2/t) on delivery and including the 13% VAT, up by Yuan 13.1/t on week or Yuan 147.5/t on year and the highest since April 2013, the data shows. Behind the rise were the steel mills’ firm demand, the strengthening global scrap market, and limited scrap availability locally in winter, Mysteel Global noted.
“Some market participants may assume that we have earned a lot on the current high prices, but that’s not true. In fact, we are mostly under some financial pressure,” a scrap trader in East China’s Jiangsu province told Mysteel Global, explaining that “though steel mills have raised their scrap procurement prices to attract more deliveries, following their adjustment we also had to pay more for securing enough scrap to meet the steelmakers’ requirements.”
Another scrap trader in East China’s Zhejiang province shared the same concern. “The prices we’re offering to our scrap suppliers are even higher than what the steel mills are offering to us. We don’t know how we can make money anymore,” he commented.
At the same time, there are still some scrap traders defending their offering prices, being reluctant to raise their scrap collecting costs any higher. “We are not willing to squeeze our profits too much. Consequently, we are not able to get enough scrap products,” another scrap trader in South China’s Guangdong province said.
On the other hand, demand for scrap among the steelmakers remains firm, as most mills are keen to build up inventories for both their near-term production and for replenishment to tide them through winter. Domestic steel scrap prices are likely to hover high for the time being, Mysteel Global understands.
Written by Lindsey Liu, liulingxian@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
