China qualified yards' steel scrap stocks at 10-month low

The total inventories of processed and unprocessed steel scrap held by China's 584 licensed steel scrapyards touched a 10-month low of 1.12 million tonnes as of August 11 after hovering at a low level during the past few weeks, Mysteel's latest survey has found. Bad weather and panic selling by the yards were mainly to blame for the reduction, market sources observed.

The stocks also hit the lowest record since China's Ministry of Industry and Information Technology had last updated its list of qualified scrapyards including the 584 firms in October 2022, Mysteel Global noted.

This summer, the sustained hot and humid weather across most of China has made it increasingly difficult for scrap dealers to locate and collect scrap materials, as Mysteel Global has reported. "Many scrapyards had to raise their purchase prices to attract scrap resources, even though they couldn't be sure they could sell at higher prices," a market analyst based in Shanghai said. "Such uncertainties even prompted some firms to clear out the stocks at their yards," she added.

Moreover, the price decline of steel scrap during the first half of this month stirred panic in the market, leading the scrapyards to sell their feed materials to domestic steelmakers at bargain prices, for fear that prices would drop further, Mysteel Global learned.

As of August 16, Mysteel's steel scrap price index settled at Yuan 2,988.7/tonne ($413.1/t) including the 13% VAT, lower by Yuan 46.1/t from July 31.

Chinese electric-arc-furnace (EAF) mills generally attempted to reduce their scrap buying prices so that their production costs would ease, Mysteel Global noted. By August 16, the losses suffered by the 40 domestic independent EAF mills under Mysteel's survey averaged Yuan 156/t, wider by another Yuan 70/t from what they were losing at the end of July.

Faced with the gloomy market, steel scrapyards are likely to maintain their inventories at low levels for the near future to avoid losses, Mysteel's survey suggested.

Written by Anthea Shi, shihui@mysteel.com
Edited by Zhenqi Yang, yangzhenqi@mysteel.com
Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.