China: Ferrous scrap prices likely to face pressure in Jun'26 amid seasonal demand slowdown

• Lower finished prices to reduce mills' appetite for scrap
  
  
• Scrap demand to slow as hot metal regains cost advantage
  
  

Mysteel Global: China's ferrous scrap market is expected to face downward pressure in June after strengthening during May, as weakening steel demand and lower finished steel prices are likely to reduce mills' appetite for scrap. Market participants expect steelmakers to lower raw material procurement prices amid seasonal demand weakness and deteriorating steel margins.

Scrap prices gain in May

China's composite ferrous scrap price averaged RMB 2,518/t ($372/t), including 13% VAT, during 6-29 May, up 1.6% m-o-m from April levels. The increase was largely supported by tight scrap availability and resilient steel production, which helped maintain demand despite mixed downstream conditions.

However, June marks the beginning of the traditional summer slowdown, with rising temperatures and seasonal rainfall expected to weaken steel consumption and put additional pressure on finished steel prices.

Hot metal regains cost advantage

Market participants noted that scrap has gradually lost its cost competitiveness against hot metal. As of 1 June, the cost of producing steel using scrap at integrated mills in Jiangsu province averaged RMB 2,213/t excluding VAT, around RMB 4/t higher than steelmaking using hot metal.

As a result, blast furnace-based mills have increasingly preferred hot metal over scrap. Meanwhile, EAF-based producers continue facing profitability challenges. According to market sources, the 76 EAF mills tracked across China recorded an average loss of RMB 5/t on rebar sales as of 2 June, limiting incentives to increase scrap consumption and potentially leading to production cuts.

Supply-side support may emerge

Despite weaker demand expectations, scrap prices could receive some support from tighter supply conditions. Scrap processors are expected to reduce operating hours as temperatures rise, while heavy rainfall across several regions may disrupt scrap collection, processing, and transportation activities.

Outlook

China's ferrous scrap prices are expected to soften in June as seasonal steel demand weakness, lower finished steel prices, and poor scrap competitiveness against hot metal weigh on consumption. However, reduced scrap generation, weather-related disruptions, and tighter collection activity may help limit the downside and prevent a sharp correction.

Note: This article has been written in accordance with a content exchange agreement between Mysteel and BigMint.