Scrap steel prices hit a seven-year high

Recently, the price of steelmaking raw materials "rising sound", the extremely hot scene can be said to earn enough attention.The price of iron ore shot up, followed by the price of coking coal and coke.Scrap steel prices are now not to be outdone, breaking a new high of nearly 7 years.

Affected by the COVID-19 epidemic at the beginning of this year, the domestic scrap steel price reached its lowest point of 2,190 yuan/ton on April 8. With the gradual control of the epidemic in China, the recovery rate of work and production increased significantly, and the scrap steel price has been rising all the way.According to monitoring data, on December 9, 2020, tangshan scrap steel price of 2,750 yuan, hit a new high of nearly seven years;Compared with the same period last month, it increased by 70 yuan/ton, or 2.61%;From the year's low point up 560 yuan/ton, up 25.57%;Compared with the same period last year, it increased 160 yuan/ton, or 6.18%.It can be seen that the price of scrap this year is still relatively large.

One of the main factors that determine the direction of prices is supply and demand.First of all, the supply of scrap steel is relatively stable. According to relevant data, the output of scrap steel in 2019 is 240 million tons, in 2018 is about 220 million tons, and in 2017 is 200 million tons.From the data in recent years, it can be seen that scrap annual growth is very stable, the growth rate is only 10% - 20%.

And scrap steel imports, import and export policy tightening in 2019, from July 1, iron and steel scrap, and eight varieties of solid waste from the class can be used as a raw material not restrict imports catalog of solid waste to the restrictive import class catalogue of solid wastes as raw materials, lead to scrap import approval process is relatively complex, the newly approved quota and scrap steel imports fell sharply.According to relevant data, The import volume of scrap steel in China in 2019 was only 184,000 tons, while the annual import volume of scrap steel in major countries and regions is about 100 million tons, which is relatively small.

At present, scrap supply is limited, but the demand is very large.China's crude steel output will exceed 1 billion tons this year, up about 5% from last year, according to estimates by the China Iron and Steel Association.In recent years, with the increasingly stringent environmental protection policies, the state strongly advocates the use of scrap steel for short-process electric furnace steelmaking;Some steel mills speed up the adjustment of production process, reduce the use of iron ore raw materials to make steel blast furnace, electric furnace steelmaking, so as to increase the amount of scrap steel, resulting in scrap supply is tight.

It is worth noting that, according to relevant information, there are less than 300 electric arc furnaces in China, mainly concentrated in east China, South China and Central China. The combined production capacity only accounts for about 10% of the total production capacity of the steel industry, while the average proportion of electric furnace steel in the world is about 30%, and that in the United States is up to 60%.With the continuous promotion of China's supply-side reform and increasingly stringent environmental protection policies, China's eAF steelmaking capacity is expected to continue to rise under the continuous upgrading of the steel industrial structure, and the demand for scrap steel in the later period will continue to increase.

The price of iron ore, which has risen by an astonishing amount this year, is again breaking a seven-year high.As of December 9, the iron ore price in Rizhao Port was 970 yuan/ton, which increased by 80 yuan/ton in 6 working days, or nearly 9%.Compared with the same period last year, it increased by 290 yuan/ton, or 42.65%.

Therefore, in the strong demand, iron ore prices continue to rise, scrap steel supply and demand situation is difficult to significantly improve, the recent scrap steel market may continue to run high volatility.