Steel Scrap Price Prices To Swing On A Positive Note In January On Pre-Holiday Stocking

Domestic steel scrap price inched up in December. As of December 31, steel scrap price in Zhangjiagang stood at 2,660 yuan/mt, up 100 yuan/mt MoM. Turkey was the main source of China's steel scrap imports. Historical data showed that Turkish steel scrap prices were lower than the domestic prices for a long period of time. The Turkish steel scrap price was $430/mt as of December 31, equivalent to 3,405 yuan/mt, 44 yuan/mt lower than purchase price of Shagang Group. The price spread between the two narrowed 228 yuan/mt.
Domestic steel scrap price kept hiking in December, mainly due to bullish ferrous metal market since November. The increase in steel scrap was significantly lower than that of other varieties, largely pushing up profit of EF steel mills. In addition, the price/performance ratio of steel scrap was better than that of pig iron, prodding steel mills to increase price to purchase more steel scrap. Looking ahead, steel mills will keep refilling stocks ahead of the Lunar New Year, but steel scrap supply tightness will force them to keep raising purchase price in January. Finished product price fell back after a surge, extending loss of steel mills, thereby taming upside in steel scrap price. In a word, steel scrap price may stable-to-strong in January.