China’s exports of steel scrap in August edged up by a tiny 58 tonnes or 3.5% on month to 1,697 tonnes, according to the latest data released by General Administration of Customs China (GACC) on September 23. The export volume in the first eight months reached 333,018 tonnes, off by a huge 62.1% from one year earlier, the data showed.
China’s steel scrap exports still lingered at a low level in August, although the volume recovered slightly, mainly because of the tough export environment, Mysteel notes. “It is not a long-term solution (of the central government) to restrict steel scrap exports via imposing such a high 40% export tax,” a Beijing-based market observer said. “The best and most efficient way is for the country to pay more attention to the electric-arc furnace (EAF) steelmakers, developing policies to encourage them to increase their scrap utilization rates.”
Li Shubin, Secretary General of the China Association of Metal Scrap Utilization, told delegates at the China Ferrous Derivatives International Conference in July that the central government should offer financial, taxation and power pricing assistance to encourage steel mills to "use less molten iron and use more steel scrap".
The capacity utilization rate of the 53 EAF steel plants nationwide which Mysteel monitors jumped by a total of 5.7 percentage points on month to 73.22% as of August 31. By contrast, over the same period, the blast furnace capacity utilization rate among the 247 steelmakers Mysteel canvasses nationwide slipped by 0.75 percentage point on month to 79.25% as of the same day, according to Mysteel’s latest survey data.
China’s domestic steel scrap supply remained tight in August, mainly due to the strengthened capacity restrictions nationwide on domestic steel plants. Moreover, the scorching temperatures and heavy rains over the month restricted scrap collection, Mysteel understands.
As a result, Chinese steel scrap prices continued to rise at a faster speed last month, in tandem with the notable increase in domestic steel mills’ demand for scrap materials. For example, Mysteel’s benchmark scrap price index surged by a total of Yuan 226.6/tonne ($33.1/t) or 10% on month to Yuan 2,483/t on delivery and including the 16% VAT as of August 31. The surge was more substantial than that of market transaction prices of 6-8mm common-grade carbon steel scrap in Zhangjiagang of East China’s Jiangsu province, the country’s core scrap consumption base, which rose by only Yuan 70/t or 3% on month to Yuan 2,370/t excluding 16% VAT as of August 31, Mysteel data shows.
“Chinese steel scrap prices are still hovering at a high level now, with demand from the steel mills remaining strong,” an official from a large-sized scrap yard in East China’s Jiangxi province said. “We are still positive about the ‘Golden September and Silver October’ period, so now we’re busy with scrap collection thanks to the cool autumn weather,” he added. These two months are traditionally the peak season for China’s steel market, Mysteel notes.
Meanwhile, the GACC data shows that China imported 80,000 tonnes of scrap in August, largely unchanged from one month earlier but off by a large 41.4% on year. The on-year slide however was mostly due to the induction furnace shut-downs nationwide since the second half of 2017
