Chinese prices of ferrous scrap may come under further downward pressure in April, as the demand for scrap among domestic steelmakers is likely to stay lukewarm, Mysteel’s latest survey suggests.Last month, the country’s steel scrap prices experienced a steep fall, in parallel with the prices of almost all ferrous commodities, Mysteel Global noted, since the expectations of market participants for a strong recovery in steel demand fell through. As of March 29, the national steel scrap price index was assessed by Mysteel at Yuan 2,795/tonne ($393.9/t) including the 13% VAT, lower by a large Yuan 236/t or 7.8% from the end of February. Entering this month, the price had dropped further to Yuan 2,768.9/t by April 2. Facing slack steel demand from end-users as well as hefty losses on their steel sales, for now China’s electric-arc-furnace (EAF) steelmakers remain hesitant about lifting their production, Mysteel’s survey showed. By the end of March, the average capacity utilization rate among the 87 independent EAF mills under Mysteel’s regular tracking was around 53%, lower by some 15 percentage points compared with the same period last year. On the other hand, the widening spread between steel scrap and hot metal has made scrap far less cost effective as a steelmaking raw material, so domestic steelmakers have generally reduced their scrap use for production, as reported. Under these circumstances, steel scrap demand from the mills is expected to remain lacklustre overall in the coming weeks, unless steel consumption among end-users shows a significant rebound, according to Mysteel’s survey. With demand for steel scrap waning, availability of the feeds in the domestic market has loosened, even though the collection and processing volumes of scrapyards are still hovering at a low level due to the slack consuming activity among steel end-users, Mysteel Global noted. As of March 27, the total inventories of steel scrap held by the 584 scrapyards qualified by China’s Ministry of Industry and Information Technology stood at 952,645 tonnes, lower by 1.1% on month, according to Mysteel’s tracking. By the same day, the scrap stocks held by the 300 blast furnace and EAF mills under Mysteel’s daily tracking had increased by 2.5% on month to reach 5.7 million tonnes.
