“The faster pace of growth in finished steel prices has widened the price spread between steel scrap and steel, thus ensuring that most steel mills enjoy healthy profit margins. That’s encouraging them to keep steady production,” a Shanghai-based market watcher commented.
As of November 20, China’s HRB 400 20mm dia rebar price, an indicator of market movement, had increased by Yuan 59/t on week to reach a one-year high of Yuan 4,174/t including the VAT.
Consequently, the price spread between rebar and steel scrap, for example, widened by Yuan 49.83/t on week to Yuan 1,503.38/t, Mysteel’s data shows.
“Our gross margins when producing rebar, for example, have increased to around Yuan 300/t whereas one month ago, they were only about Yuan 50/t,” an official with a Sichuan-based EAF mill in Southwest China confirmed.
“Meanwhile, we have raised our buying price for scrap with our traders – which we hope will prompt our suppliers to sell more scrap to us, rather than to the integrated mills, as we need to stock up more scrap materials for our near-term production and for winter, generally,” he added.
In tandem, as of November 19, total steel scrap stocks at the 61 Chinese steel plants Mysteel monitors weekly comprising both blast furnace and electric-arc-furnace mills increased for the third week, rising by another 372,500 tonne or 14.1% on week to 3 million tonnes.
Written by Lindsey Liu, firstname.lastname@example.org
Edited by Russ McCulloch, email@example.com