Fastmarkets’ price assessment for steel scrap heavy scrap domestic, delivered mill China was 2,200-2,360 yuan ($313-335) per tonne including value-added tax last Friday April 10, down by 210-230 yuan per tonne from 2,430-2,570 yuan per tonne a week earlier.
This is also 440-490 yuan per tonne lower than the assessment of 2,690-2,800 yuan per tonne at the beginning of this year.
This is the lowest that the prices have been since July 2018, according to Fastmarkets’ pricing database, MInD.
“Scrap yards sold scrap actively over the past few weeks to generate capital flow,” a trader in eastern China said.
The destocking pressure resulted in mills lowering their purchase prices significantly. Mills’ scrap inventory levels also rose because of deliveries being stepped up, sources said.
“Now steel mills have slowed down their procurement, and taking a wait-and-see approach,” a second trader in the region said.
But market participants expect scrap prices to rebound soon.
A strengthening steel market is a driver of ferrous scrap prices, sources said.
For instance, Fastmarkets’ assessment for steel reinforcing bar (rebar) domestic, ex-whs Eastern China were at 3,430-3,460 yuan per tonne last Friday, up by 60 yuan per tonne from 3,370-3,400 yuan per tonne on Wednesday.
Meanwhile, steel mills that operate blast furnaces will probably raise their consumption of scrap because their prices do not exceed hot metal production costs, an industry analyst in eastern China said.
Compared with hot metal production costs, scrap prices are up to 100 yuan per tonne lower, he said.
Electrical-arc furnace operators are also raising production, which will result in a higher consumption of scrap, a second industry analyst in northern China said.
The capacity utilization rates for Chinese EAF mills averaged at 52% on April 10, up 4 percentage points from a week earlier, according a local industry information provider.
China’s ferrous scrap market plummeted over the past three weeks due to destocking pressure on sellers coupled with low procurement rates among mills, which sent prices to their lowest in close to two years.