Posted on 20 Oct 2023
China's steel scrap supply from the recycling of End-of-Life Vehicles (ELVs) is expected to shrink in October after last month's rise, as domestic car scrapping and dismantling companies are less enthusiastic about their processing due to the lack of confidence in scrap consumption among steelmakers this month, Mysteel's survey found.
In September, Chinese steel market participants generally became more vigorous in their production with the hope that domestic steel demand would rebound robustly in the country's traditional autumn peak of industrial activities, Mysteel Global noted. Steel scrap processors were no exception.
During last month, a total of 38,075 ELVs were processed at 85 domestic car scrapping and dismantling companies, with the average processed volume per company rising 6.7% from the previous month, according to Mysteel's survey.
China's retail sales of passenger vehicles totalled 2.1 million units in September, growing 9.5% on month and 1.1% on year, according to data released by the China Association of Automobile Manufacturers.
However, the country's steel demand in the past month was weaker than the market participants had anticipated, leading the consumption of steel scrap to decline marginally, Mysteel Global noted.
Meanwhile, domestic steel scrap prices also started a downward trend late last month. As of September 28, Mysteel's steel scrap price index settled at Yuan 2,979.2/tonne ($414.9/t) including the 13% VAT, slipping 0.3% on month. Entering this month, the price index kept falling to hit a four-month low of Yuan 2,915.3/t by October 18 as bearish sentiment intensified in the domestic scrap market, Mysteel Global noted.
This has cooled market participants' expectations for steel scrap consumption in October and made scrap processors hesitate to collect steel scrap materials, even though the domestic steel market remains in the traditional peak season, Mysteel's survey suggests.
As such, Chinese car scrapping and dismantling companies are expected to reduce their processing volumes this month, and their steel scrap output is likely to decline, according to Mysteel's survey.
Source:Mysteel Global
