Chinese steel scrap market review in November and forecast for December

Domestic steel scrap prices stabilized in November. As of November 30, the steel scrap prices in Zhangjiagang stood at 2,560 yuan/mt, up 10 yuan/mt MoM. The Turkish steel scrap prices stood at $395/mt as of November 30, equivalent to 2,805 yuan/mt, 184 yuan/mt lower than purchase prices of Shagang Group. The price spread between Turkish and domestic steel scrap narrowed 171 yuan/mt from October.
In November, ferrous metal prices retraced down after initial rise. In the first half of the month, underpinned by favorable macro policies, iron ore prices hit a year-to-date high. In addition, smooth depletion of steel inventory boosted ferrous metal prices. However, downstream consumption failed to improve further. Construction material demand in northern China shrank in colder weather. Starting from late November, steel inventory piled up. At the same time, irrational rise in iron ore prices brought with it regulatory attention, and the industry and macro market weakened. Prices of most varieties in ferrous metal market fell rapidly in late November. Only coke and coal prices hiked due to frequent coal mine accidents. In terms of steel scrap, a gain in prices of steel scrap in November was significantly smaller than that of other ferrous metals. This was mainly due to the acceleration of the disposal of new and old scrap near the end of the year, resulting in ample steel scrap supply in major mainstream markets. Steel mills lowered purchased prices of steel scrap. Steel scrap prices fluctuated less. In the future, most steel mills smoothly refilled steel scrap recently. Rising supply will curb upside in steel scrap prices. It is expected that steel scrap prices will be volatile in December. This round of new/used steel scrap disposal will slow down after the Spring Festival, and steel scrap supply may be tight by then.