Posted on 09 Jul 2021
After rising for the three prior months, steel scrap utilization in the crude steel produced by the 211 Chinese steel mills sampled in Mysteel’s regular survey shrank in June, reversing down by an albeit in tiny 0.29 percentage point from May to 26.84% on average. The survey samples integrated and electric-arc-furnace (EAF) producers, as well as those mills using both blast furnace (BF) and EAF technologies.
As of end-June, these 211 surveyed mills held 7.62 million tonnes of steel scrap in inventories, or lower by 125,500 tonnes on month. Their total scrap consumption during June also decreased by 742,600 tonnes on month to 17.6 million tonnes, the survey showed.
Scrap use in domestic steel output declined mainly because of the decrease in usage among BF mills last month, the results indicated.
For example, steel scrap utilization among the 130 blast furnace mills Mysteel samples averaged 19.46% last month – equivalent to nearly 9.03 million tonnes of scrap in volume – which was lower by 0.71 percentage point or 654,200 tonnes compared with May.
“After entering June, the rise in temperatures and the heavy wet-season rains disrupted progress on outdoor construction projects for some time. This affected finished steel consumption and adding downward pressure on steel prices,” a market watcher explained.
“To some BF mills, consuming steel scrap is only marginally more cost-effective than consuming iron ore. If the price spread between steel scrap and rebar narrows, any increase in the scrap consumption ratio among many BF steelmakers will be limited or may even decline,” he said.
Even though finished steel prices weakened last month, domestic scrap prices stayed stable at a relatively high level, Mysteel Global noted. The hot rainy weather in summer had also hampered scrap collection and processing, causing supplies to tighten.
As of June 30, Mysteel’s steel scrap price index had increased by Yuan 186.4/tonne ($28.8/t) on month to Yuan 3,703.5/t, while as of the same day the national price for HRB400E 20mm dia rebar had decreased by Yuan 318/t on month to Yuan 4,939/t, both including the 13% VAT.
Consequently, as of June 30the price spread between rebar and steel scrap had narrowed to Yuan 1,230.7/t, down Yuan 484/t on month, Mysteel’s data shows.
Besides the BF-only mills, the 24 mills operating both the BFs and EAFs used 24.19% of scrap in their steel melts in June, up 0.33 percentage point on month, Mysteel’s survey showed.
Source:Mysteel Global
