The stocks of processed and unprocessed steel scrap held by China's 287 licensed steel scrapyards reversed down by 1% on month during October, largely due to robust scrap demand from domestic steel mills, according to Mysteel's latest survey published Tuesday. The dip ended two straight months of increases.
As of October 26, the scrap yards - all qualified by the country's Ministry of Industry and Information Technology - were holding 1.52 million tonnes of processed and unprocessed scrap. Within the total, inventories of processed scrap were lower by 1.2% on month at 955,400 tonnes, and those of unprocessed were down by 0.6% on month at 567,000 tonnes, the survey showed.
However, the volumes of steel scrap stocked at yards in different regions varied, Mysteel Global noted. For example, the total volume held by 20 qualified scrap yards in South China had plunged by a huge by 36.9% on month as of Monday, the largest decrease among all regions the survey sampled. Conversely, the volume stored at 37 yards in Northeast China increased by 19% on month.
"For steel mills in South and East China, the good weather and firm steel demand encouraged most of them to maintain high production, so more steel scrap was consumed in their steelmaking processes. To ensure steady scrap deliveries, these mills had raised their scrap buying prices accordingly," a Shanghai-based market watcher commented.
In tandem, over the week of October 16-22, daily steel scrap consumption among the 61 blast-furnace and electric-arc-furnace steelmakers which Mysteel checks nationwide reached a multi-year high of 3,509 tonnes/day as of October 22. Meanwhile, Mysteel's survey of monthly scrap trends published Tuesday showed that till October 26, total scrap usage this month was higher by 1.2% on month at 5.58 million tonnes.
However, for steel mills in Northeast China, the recent arrival of colder temperatures has made outdoor scrap recycling and processing activities more difficult. Thus, some scrapyards have held off selling and are building scrap inventories instead, aiming to make some profits when steelmakers begin to procure for replenishment for winter production soon, according to the market watcher.
As of October 27, Mysteel's steel scrap price index increased by Yuan 46.9/tonne ($6.9/t) on month to Yuan 2,602.5/t on delivery and including the 13% VAT, Mysteel's data shows.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint Research.