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Haikou Jiangdong New Area
Industry

China's steel scrap prices likely to be under pressure in July

July 06, 2020


Abstract : Prices of the steel scrap in China is likely to see a drop of 50-100 yuan per tone in July. From the perspective of the current market, bearish factors seem to gain the upper hand, according to 315i.com.

BEIJING, July 6 (Xinhua) -- Prices of steel scrap, a key steel-making ingredient, are expected to show a downtrend in July, estimated by 315i.com, a commodity information provider in China. 

Prices of the steel scrap in China is likely to see a drop of 50-100 yuan per tonne in July. From the perspective of the current market, bearish factors seem to gain the upper hand, according to 315i.com. 

Data shows that after entering 2020, steel scrap prices have been declining all the way. Although the prices in mid April rebounded, a big gap still existed compared with the prices at the end of 2019. Due to the COVID-19 outbreak, some traders have taken a wait-and-see attitude and been reluctant to sell their stocks. 

The steel scarp prices are subject to the actions taken by the steel mills in the next step. 

At present, the domestic steel mills with the long-process steel production (blast furnace-basic oxygen furnace, BF-BOF) can have a profit of 200-300 yuan when producing one tonne of steel. However, the steel mills with the short-term production process (electric furnace) are lingering around the breakeven point. Some electric furnace steel-making enterprises have begun to lose money and prepared for facility overhaul or production cut. 

Due to the impact of rain and high temperature in many regions in the country, the steel purchase from the end users has slowed, and the decline in social steel inventories has narrowed for two consecutive weeks, increasing the risk of accumulating stocks in the off-season.

Given the current situation, the electric furnace steel-making enterprises have no choice but to purchase the steel scrap at a lower price. Once they start to suppress steel scrap prices, the BF-BOF steel mills may quickly follow suit, according to 315i.com. (Edited by Hu Pingchao with Xinhua Silk Road, hupingchao@xinhua.org)

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Keyword: steel industry steel scrap

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