RESEARCH: Key takeaways from the latest Steel Scrap and Metallics market tracker

The latest forecasts from Fastmarkets’ team of analysts are ready to view.

  • The price for steel scrap in China has risen recently, amid high mill operating rates and at a time of heavy rain, but it remains at a premium to hot metal, we estimate. Heavy rains in China tend to increase the moisture content of iron ore stockpiles, which can cause issues during the sintering process, and this may have encouraged an increased consumption of scrap in July, relative to previous months. But with steel mills already running at high utilization, there was little room to raise operating rates and boost demand for raw materials further. There was little incentive from price-competition to increase scrap intake per tonne of steel produced, and we expect that scrap prices will weaken. Moreover, scrap supply was expected to increase further because of rising levels of activity in scrap generation and collection.
  • That said, Chinese crude steel production has outperformed our expectations in its post-pandemic recovery. Crude steel output was up by 2.30% year-on-year in the first half of 2020 to 503 million tonnes, and we have revised upward what was initially a more bearish forecast for this year. We now estimate that production will grow year-on-year in 2020, assuming that there is no second wave of Covid-19 to significantly hamper output in the second half of the year. China’s recently announced infrastructure spending can boost steel demand further. Our research shows that recent infrastructure investment announcements will require about 33 million tonnes of additional crude steel production.
  • Among major scrap exporters, the emergence of a second wave of Covid-19 in Japan could tighten scrap availability, with prices already up in July. This may benefit scrap exporters from the US West Coast, who also supply into East and Southeast Asia, if buyers seek material from markets other than Japan. Within the US, scrap supply appears to be easing, with the majority of automotive producers having restarted output from mid-May onward. Automotive output normally falls to its lowest level in July, when producers prepare to release new models to register in the autumn, in addition to planned maintenance on existing vehicle ranges. But this may not be the case this year, with Oxford Economics forecasting that third-quarter automotive production will rise by 77% quarter on quarter.

Click here to view the Steel Scrap and Metallics Market Tracker in full.

If you are not a subscriber but would like see a free sample report, please click here.

What to read next
General Motors (GM) is investing $650 million to develop the Thacker Pass mine in Nevada, the largest known source of lithium in the US and the third largest in the world
Electrolysis processes developed by Boston Metal and Electra that eliminate the need for coal in steel production could be key to a net-zero emissions future for the metallics industry, attendees learned at Fastmarkets’ conference on January 17-19 in Dallas
Low supply, strong demand to spur scrap prices higher in Feb, market says
US deep-sea ferrous export prices from the East Coast to Turkey have plateaued, with a Turkish mill purchasing a cargo at prices stable from the last-reported sale
The current shortage of some higher purity grades of aluminium, such as P0610, and the robust demand for units should maintain the higher differential to prices for P1020-grade aluminium, market sources told Fastmarkets on Monday January 30
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.