- Pre-CNY stocking supports scrap prices despite muted buying pace
- Post-holiday inventory risk may lift prices further
Mysteel Global: China’s steel scrap prices remain firm in February, supported by pre-holiday restocking by steelmakers and tightening availability in the spot market, even as overall buying activity stays measured. According to Mysteel Global, mills continue to secure scrap ahead of the Chinese New Year (CNY) holiday, when trading and logistics are expected to slow sharply.
At the end of January, China’s national steel scrap price was assessed at RMB 2,417/t ($349/t) including 13% VAT, up 1.1% month-on-month. By 4 February, prices strengthened further to RMB 2,432/t ($351/t), reflecting incremental procurement by mills building feedstock inventories for the February 1523 holiday period. Several steelmakers raised purchases to ensure uninterrupted production during the holiday lull, when market participation typically declines.
Supply-side constraints added to price support. Many scrap processing companies shut offices and facilities early this month to begin holiday breaks and are not expected to resume operations until late February. This early shutdown tightened scrap availability and prompted some mills to lift buying prices to attract deliveries. For instance, Shagang Group, a leading electric-arc-furnace steelmaker in east China’s Jiangsu province, raised domestic scrap procurement prices by RMB 50/t ($7/t) on 3 February, highlighting efforts to secure material amid tightening supply.
However, Mysteel noted that pre-holiday restocking has been slower than in previous years, reflecting cautious sentiment and ongoing margin pressure at mills. As of 4 February, total steel scrap inventories held by the 300 blast furnace and EAF mills tracked nationwide stood at 6.1 million tonnes, down 12.8% year-on-year compared with the same period ahead of last year’s CNY holiday. The lower inventory base raises the risk of a tight supply after the holiday, potentially prompting accelerated restocking and lending further support to scrap prices later in the month.
On the demand side, February scrap consumption is expected to ease temporarily. Most mini-mills are set to suspend operations during the CNY break, while integrated mills continue to curb scrap usage due to weaker cost competitiveness versus hot metal. By early February, the cost of scrap-based steelmaking at integrated mills in Jiangsu averaged RMB 2,213/t ($319/t), around RMB 39/t ($6/t) higher than hot metal routes, discouraging aggressive scrap intake.
Outlook: In the near term, scrap prices are likely to remain supported by low inventories and tight availability. While holiday-related shutdowns cap immediate consumption, the risk of post-CNY restocking amid depleted stocks could keep the price bias tilted upward once mills resume operations.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
