Both scrap collection processors and EAF producers are suffering...

Both scrap collection processors and EAF producers are suffering considerable losses at the moment. Operational rates of EAF producers are continuing to slip back from a pretty low operational rate as it is. Scrap supplies are quite low as well.

it will take time before the only scrap supply chain is operating like clockwork and starts to dent IO demand.

until then, with steel demand starting to ramp up, EAF operational usage and scrap feed within blast furnace will hover at low levels.

All this bodes well for IO demand.


Electric furnace output declined slightly due to slow restocking (SMM)

During the survey period (March 12-March 19), rebar futures prices bottomed out, and spot prices rebounded slightly amid improving market sentiment. However, the production resumption at downstream terminals slowed down, and the overall demand was weaker than in previous years. Although the inventory at factory dropped, it still remained at a high level. Some steel mills added temporary maintenance this week, and the operating rate of electric furnaces dropped slightly to 40.94% this week.

In terms of regions, in the east China, thanks to the rebound in steel prices, the immediate profits of some steel mills slightly recovered. However, some steel mills previously reduced their production loads, resulting in a slight decrease in the operating rate in east China; in the south China, steel mills losses narrowed, and some steel mills' immediate profits can reach 30 yuan/ton. However, the inventory pressure before the year has not been effectively resolved, some steel mills have lowered their output, and the overall regional operating rate has stabilized with a slight decrease. In central China, the recovery of market demand is limited, the falling prices suppressed transactions, steel mill inventories can hardly to be digested, some steel mills suspended production, and the overall operating rate further declined; in southwest China, steel prices rebounded at the end of this period, and most electric furnace steel mills in southwest China losses narrowed, but terminal demand performance is poor, and early inventory is still being digested, some steel mills arranged temporary inspections, and the operating rate dropped slightly.

In the follow-up, steel prices bottomed out amid improving market sentiment, steel mill inventories have been slightly reduced, and some steel mills are willing to resume production and increase production, but weak demand is still the biggest constraint. Taken together, it is expected that the operating rate of electric furnaces will increase steadily next week.

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China scrap supply from ELV may rise in March
Source:MysteelMar 20, 2024 14:30
Steel Scrap
Demand
Price
Supply
After slumping in the previous month, the quantity of ferrous scrap recycled from end-of-life vehicles (ELVs) in China is likely to rebound in March as domestic scrap processors have resumed their normal operations this month, a recent Mysteel survey suggests.
As the eight-day official holiday for Chinese New Year (CNY) in mid-February disrupted the operations among most car scrapping and dismantling companies in the country, domestic steel scrap supply from ELVs dropped significantly last month, Mysteel Global noted.



In February, a total of 27,500 units of ELVs were processed by the 85 scrapping enterprises nationwide under Mysteel's tracking, lower by 17.5% from the prior month, and by the end of last month, their ELV inventories dropped to 9,500 units, 10.2% fewer than in end-January.







Meanwhile, the total volume of steel scrap obtained from ELVs by the 33 processors under Mysteel's other survey also decreased to 17,400 tonnes in the past month, falling 10.7% from that in January.



As for this month, the processors and steel scrap dealers have gradually restarted their operations after the CNY holiday break, leading the supply of scrap recycled from ELVs to recover, market sources observed.

Moreover, the general anticipation for a traditional spring revival in domestic ferrous markets encouraged most steel scrap suppliers to ramp up their collection and processing earlier this month, Mysteel Global noted.

However, the actual weak steel demand soon dampened market sentiment and placed heavy pressure on prices of major ferrous commodities including steel scrap, as reported. The losses on sales then made scrap processors reluctant to further lift their operations, Mysteel Global learned.

By March 19, China's national steel scrap price index was assessed by Mysteel at Yuan 2,789.4/tonne ($392.7/t), losing a large Yuan 250/t or 8.2% on month and hitting the lowest level since early November 2022.

Under such circumstances, the growth in the availability of steel scrap collected from ELVs may be moderate in March, according to Mysteel's estimate.