Posted on 05 Jul 2022
Stocks of steel scrap at the 61 Chinese blast-furnace and electric-arc-furnace (EAF) makers under Mysteel's regular survey reversed down last week after two weeks of rises, declining by 206,400 tonnes or 9.1% on week to 2.07 million tonnes as of June 30 a new low since May 2020. Propelling the decline was the rather slow pace of scrap deliveries, industry sources explained.
"The main reason for the plunge in scrap inventories was the fall-off in deliveries to mills," a Shanghai-based market watcher commented.
The heavy rains and high temperatures in many regions of China continued to hamper the collection and sorting of scrap, resulting in the seasonal scrap supply tightness, Mysteel Global noted.
Besides the limited scrap availability, the fast pace that some scrap traders had kept in previous weeks delivering their material to mills also meant that their scrap stocks at hand stayed low. As a result, "though scrap prices rebounded a little by the end of last week, most scrap traders showed no interest in accelerating their speed of deliveries as the price increase was not as large as expected," she added.
As of July 1, Mysteel's steel scrap price index increased by Yuan 24.8/tonne ($3.7/t) on week to Yuan 3,376.2/t and including the 13% VAT, according to the database. This was in line with the recovery of domestic steel prices where the national price of HRB400E 20mm dia rebar assessed by Mysteel had edged up by a larger Yuan 79/t on week to Yuan 4,365/t including the VAT.
Over June 24-30, steel scrap deliveries to the 61 surveyed steel mills tumbled by 32% on week to average 1,925.8 tonnes/day, or a new low since mid-February.
Meanwhile, daily scrap consumption among these sampled mills decreased too by 8.6% on week to 2,413.5 t/d, also a new low since March 2020, as the thin margins and even losses that some mills were incurring kept forcing them to reduce output, which in turn led them to use less scrap.
For example, as of last Thursday, the capacity utilization rate among China's 85 independent EAF makers nationwide under Mysteel's survey had decreased for the eighth straight week to a five-month low of just 35.59%.
Source:Mysteel Global
