ELV scrap supply in China seen rising further
Last month, China's scrap supply from ELVs increased significantly as most vehicle scrapping and dismantling companies had resumed operations after their holiday breaks for Chinese New Year in February, as reported.
In March, a total of 31,000 ELVs were processed by the 85 enterprises under Mysteel's regular tracking, representing a jump of 13% from the previous month. Consequently, by the end of March, their ELV inventories had fallen by another 2.1% on month to reach 9,300 units – the fourth consecutive on-month reduction.
The slump of steel scrap prices in March triggered panic selling among domestic car scrapping and dismantling companies and prompted them to keep their stocks at low levels, according to Mysteel's report.
Entering April, domestic steel scrap prices have been rising steadily, driven by the strong replenishment demand of steelmakers, as well as improved sentiment in the ferrous market, as Mysteel Global reported. The uptick in prices may encourage the scrap processors to speed up their operations this month, industry sources suggest.
On April 17, China's national steel scrap price index under Mysteel's assessment was at Yuan 2,847.1/tonne ($401.6/t) including the 13% VAT, higher by Yuan 52.1/t or 1.9% from the end of March.
On the other hand, so far this month domestic inventories of finished steel products held by steelmakers and traders have dropped at a faster rate compared with March, reflecting the further recovery of steel demand among end-users, Mysteel's survey showed.
However, actual demand for steel scrap may not expand significantly as the electric-arc-furnace steelmakers have slowed their operations due to their hefty losses on steel sales, while the blast furnace mills are tending to reduce their scrap use to shave their production costs, according to the report.
This will likely restrict the growth of scrap output among ELV scrapping companies, it warned.
Written by Anthea Shi, shihui@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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