China scrap price refreshes 67-m high on better demand
It’s the firmness of demand rather than any major shortage in supply that is propelling prices upwards, market watchers have noted. Tuesday’s price in Zhangjiagang represented a jump of Yuan 10/t from Monday and Yuan 40/t from seven days earlier, Mysteel notes.
“The rising steel scrap price is also finding support from the finished steel market, as steelmakers are maximizing their production given to the high profit margins they’re enjoying now, especially for the longs,” a Shanghai-based steel scrap analyst said. “I believe that the prices may go up further as deliveries to the steel plants are still not as good as we’d expected before,” she added.
As of October 19, the volume of steel scrap in inventory held among the 61 electric-arc-furnace (EAF) and blast-furnace (BF) steel mills across China which Mysteel surveys only expanded by another 16,500 tonnes or 0.5% on week to 2.86 million tonnes, according to Mysteel’s latest data. This would last the mills some 13.22 days on average, a tiny 0.18 day longer on week.
On October 21, China’s largest long steel producer – Jiangsu Shagang Group (Shagang), headquartered in Zhangjiagang city – finally decided to raise its long steel list prices after holding these for 40 days straight. Shagang lifted prices for rebar, bar in coils, and wire rods, all by Yuan 50/t for domestic sales over October 21-31, as Mysteel reported.
“Shagang’s price rise is not a surprise to the market, but (the raise) will continue to benefit the steel scrap market,” a steel scrap trader from South China’s Guangdong province said, noting the positive boost this was giving sentiment. “Supplies of steel scrap still remain tight in most areas of South China, so the prices are unlikely to fall over the short term,” he said.
As of October 22, Mysteel’s national average benchmark price for HRB 400 20mm dia rebar continued the steady increase observed since the beginning of October to hit the year’s high so far of Yuan 4,669/t including the 16% VAT, according to Mysteel’s latest data.
For both EAF and BF steelmakers nationwide are now hurrying to beef up their production in preparation for having to trim output in winter as government-initiated production curbs kick in. Thus, the steelmaking capacity utilization rate at the 53 EAF steel plants Mysteel surveyed nationwide edged up by 0.15 percentage point on week as of October 19 to reach 76.09%.
Meanwhile, the ironmaking capacity utilization rate at the 247 BF steel plants nationwide refreshed their year’s high of 82.04%, though this was up by a tiny 0.11% week on week.
Written by Rebecca Zhu, rebeccazhu@mysteel.net.cn
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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