BEIJING, June 1 (Xinhua) -- China's scrap steel market is expected to enjoy stable performance in early June as the factors propping up its prices in May will still exist.
In May this year, the domestic scrap steel market as a whole showed an upward trend amid fluctuations. Industry analysts believe that the shortage of scrap steel resources is the main reason for the recent increase in scrap steel prices.
As the construction sites and downstream processing companies started operation later this year, the overall output of scrap steel resources has decreased significantly compared to previous years. Most scrap steel traders found it difficult to buy the resources and were reluctant to sell. Against such background, most steel mills have successively raised scrap steel purchase prices.
In addition, the rising cost of molten iron production is also one of the main reasons for the recent increase in scrap steel prices. Under such circumstances, most steel mills have also increased their willingness to use scrap steel.
Although the steel market is about to enter the off-season in June, given the late production resumption this year, in anticipation of the release of demand for rush work, it is expected that the steel stocks will continue to decline in the future, which will support the steel prices, and thus be beneficial to scrap steel.
However, regions in south China will have the rainy season in the middle and late June, limiting the operation of the construction sites and dampening the steel demand. It will be negative for the prices of steel, even the scrap steel, according to industry insiders. (Edited by Hu Pingchao with Xinhua Silk Road, hupingchao@xinhua.org)
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