CN steel scrap prices dip after steel prices soften
Source: Mysteel
Jun 20, 2018 17:17
China’s domestic steel scrap market slowed a little Wednesday as the wider steel market remained skittish from fears of a renewed China-US trade war. Domestic steel scrap prices dipped slightly on Wednesday though steel prices declined for a second day following Washington’s threat issued Monday of adding new tariffs on Chinese products worth $200 billion.
“Currently, the most important factors impacting scrap prices are domestic steel price movements and steel margins among steelmakers, so once the finished steel price trends become clear, scrap prices will follow no matter what the reasons are,” a Beijing-based scrap analyst commented. But he added that as the pricing power of China’s steel scrap sector is mostly in the hands of the steelmakers, normally the price change in scrap would slower than changes in finished steel.
Mysteel’s national average price for HRB400 20mm rebar lost Yuan 36/tonne ($5.5/t) over the past two days to reach Yuan 4,209/t including the 16% VAT as of June 20. By contrast, steel scrap prices witnessed almost no change on Tuesday and on Wednesday prices in only a few regions lost ground.
Mysteel’s price for 6-8mm scrap in North China’s Beijing, for example, dipped by Yuan 30/tonne on day to Yuan 2,080/tonne as of June 20, excluding the 16% VAT, while scrap prices in Zhangjiagang in East China’s Jiangsu province remained stable from Tuesday.
Margins among electric-arc furnace (EAF) steel mills in East China are currently around Yuan 400/t, while those enjoyed by operators of blast furnaces also in the country’s east are much larger at Yuan 1,100-1,200/t, the analyst noted.
But he pointed out that the scrap ratios being maintained by most blast furnace operators have not seen any major changes recently due to the relative strength of scrap prices versus iron ore and coal. Another Shanghai-based analyst calculated that, at present, the average ratio of scrap feeds in converters nationwide is 13%-20%, depending on technologies employed by each steel mill.
“The steel margins the EAF makers are winning currently are still healthy and these are prompting them to lift their production – especially when they notice that environmental checks conducted by the central government are impacting some BF steel mills’ production and on scrap collection in some areas such as Southeast China’s Guangdong province,” the Shanghai-based analyst remarked. “Thus, if domestic steel prices recover in the next few days, steel scrap prices may continue to remain at present levels.”
Written by Victoria Zou, zyongjia@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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