Scrap price falls in China

According to the reports, the scrap price in China reached its lowest level in recent years. The price of Chinese steel scrap experienced a significant drop in the last days of July this year due to the decrease in demand from the country's manufacturers. The price of Chinese scrap was reduced by 99.6 yuan equivalent to 13.7 dollars per ton from July 26. Now, scrap is sold in this country at a price of 3,667.3 yuan per ton, including 13% VAT, which is the lowest price of scrap in China since November 3, 2020. The national price of Chinese 20 mm rebar also fell by 123 yuan per ton since July 26.

The noticeable decline in steel industry profits in the country has prompted manufacturers to pay a lower price for scrap in order to reduce their production costs. For example, Shagang Group, China's leading electric arc furnace (EAF) manufacturer, lowered the announced price of scrap by 100 yuan per ton last week, while it had dropped in the previous two weeks. The announcement of lower scrap price by Shagang Group prompted other Chinese manufacturers to pay lower scrap price in the last days of July 2024, so the price of this product in China dropped by about 100 yuan per ton.

Surveys show that Chinese producers not only offered a lower price for scrap in the last days of July, but also reduced their consumption. According to the assessments of the reporters, the average daily consumption of scrap between 22 and 26 July among 300 blast furnace and electric arc steel factories in China decreased by 1.6% per week and reached 516,360 tons per day, and during this time period, the amount of scrap imported to these 300 factories was estimated at an average of 535,840 tons per day, which represents a decrease of 1.1% compared to two weeks ago. In fact, the stagnation of China's domestic steel market has caused steel production in this country to take a downward trend in July, and the amount of iron scrap stored in Chinese factories has increased sharply in this month. According to the researchers reports, total scrap stocks in 300 Chinese steel factories grew by 2.3% in the last week of July and reached 5.2 million tons. Now, the available reserves of scrap in these factories correspond to 8.9 days of production, which is 0.1 days more than the previous period with the current consumption. As a result, Chinese steelmakers reduced the amount of steel production and purchase volume of their primary items due to the fear of more losses.