Posted on 18 Jan 2022
Steel scrap inventories at the 61 Chinese steel plants Mysteel monitors weekly comprising both blast-furnace (BF) and electric-arc-furnace (EAF) steelmakers continues to rise, with the total hitting an eight-month high of 3.59 million tonnes as of January 14. Sources attributed the uptick to domestic BF makers' replenishment for the upcoming Chinese New Year (CNY) holiday and to lower consumption among EAF mills amid their thinning margins.
The stocks assessment represented a week-on-week climb of 152,600 tonnes or 4.4% and marked the fourth successive weekly rise. The total tonnage would be sufficient for 20.2 days of consumption among the sampled mills at their present daily utilization rate, or 1.4 days longer than the prior week, according to Mysteel's latest weekly survey.
As only two weeks remain before the CNY holidays over January 31-February 6 begin, the steel mills - particularly EAF producers - have gradually ended their campaigns of scrap replenishment. At present, only some blast furnace mills needing to maintain normal production are still purchasing steel scrap, Mysteel Global noted.
On the other hand, the relentless climb in scrap prices over the past two weeks has added significantly to the EAF mills' production costs, with some of them now even losing money. Consequently, market insiders say they're noticing some EAF mills have been quietly withdrawing from the market of late so their staff can enjoy longer CNY holiday breaks.
Scrap traders, on the other hand, seem to be accumulating tonnage instead of lowering prices to clear their yards, Mysteel Global notes. The traders are factoring-in the growing difficulty of collecting scrap as the winter's cold sets in, and the certainty of logistics problems before the CNY holiday as truck transportation becomes tight.
Over January 7-14, scrap deliveries from traders to the 61 surveyed mills decreased by 9.3% on week to average 3,317.8 tonnes/day, while their mills scrap consumption decreased by 3.9% on week to 2,954.3 t/d on average, according to Mysteel's assessment.
As of January 14, Mysteel's steel scrap price index remained strong, increasing by another Yuan 11.8/tonne ($1.9/t) on week to Yuan 3,632/t on delivery and including the 13% VAT.
Source:Mysteel Global
