Recently a number of steel mills to increase the purchase price of scrap, various regions have different degrees of rise, scrap market panic mentality has eased. The main reason for the quick rebound after the scrap price crash is: scrap supply decreases, steel demand increases, scrap supply and demand gradually return. This round of scrap prices rebound can last long, how strong the rebound? Believe that we should pay more attention to, for this reason, small make up will be simple analysis from the following aspects.
I. supply side
Recently, affected by the continuous decline in scrap prices, scrap suppliers often adopt fast in and out operations, especially in the past two weeks, mainstream steel mills frequently suppress scrap prices, some scrap merchants in the panic mood crazy dumping goods, scrap social inventory obvious. At present, some scrap sites remain in low inventory or clear state, so it is unlikely that there will be concentrated selling again in the short term. According to the survey, since last weekend, the daily arrival volume of mainstream steel mills in east China has dropped from about 30,000 tons to less than 10,000 tons. The arrival volume of other steel mills also shows a declining trend, and the arrival volume of some steel mills with lower purchase prices has dropped below the daily consumption.
Figure 1: comparison of scrap arrival quantity and market price in east China steel plant
Second, the demand side
Recent scrap prices continue to fall, scrap and pig iron, screw thread spread gradually widened. Take east China as an example, at present, the price difference between spiral waste is about 1350 yuan/ton, the price difference between pig iron and steel scrap is about 480 yuan/ton, the economic benefits of adding scrap gradually appear, and some steel mills have increased the consumption of scrap. As of April 10, the daily consumption of 31 large and medium-sized steel enterprises was 88,100 tons, an increase of 28,800 tons or 3.28% from last Friday.
Figure 2: price trend of scrap and rebar
Blast furnace plants, up to April 10, zoomian steel survey statistics of the number of blast furnace operating rate is 77.79%, up 0.98% month-on-month, down 2.06% year on year; The volume rate of blast furnace was 84.73%, increasing by 0.76% and decreasing by 1.72%. Recently, with the end of the heating season production limit, the blast furnace has resumed production actively. In recent weeks, the blast furnace operation rate has continued to rise. In addition, the scrap steel price is relatively higher than the cost performance ratio of molten iron.
Figure 3: trend of bf operating rate
As for electric furnace factories, by April 10, zoomian steel has investigated and counted 91 steel enterprises with electric furnace working samples in China, among which 35 are with long process and 56 are with short process. The operating rate of electric furnace continues to rise. This week, the number of electric furnaces in China increased by 3.85 percentage points to 58.97 percent, and the utilization rate of electric furnaces increased by 3.97 percentage points to 51.94 percent. The number of electric furnaces in the 56 short-process steel mills rose 5.21 percentage points to 56.25 percent from Friday, and the utilization rate rose 5.87 percentage points to 42.94 percent. At present, the profit of the electric furnace factory is between 200-300 yuan/ton. Driven by the profit, the electric furnace factories in east China, southwest China and central and southern China actively resume production and increase production. It is expected that the operating rate of the electric furnace and the utilization rate of the production capacity will be further improved.
Figure 4: electric furnace capacity utilization trend
From the steel point of view, the current steel mill production enthusiasm is higher, the rate of blast furnace and electric furnace operating rate continues to rise, the steel supply continues to increase, the steel mill inventory pressure is greater. In the absence of obvious good policy stimulus, the continuous good remains to be seen, in this case, scrap is also difficult to have a bright performance.
Summary: the current steel mill production profit is ok, blast furnace, converter and electric furnace operating rate continues to be high, the demand for scrap continues to increase, support scrap prices rise. But the steel inventory slowly, intensifying market concern about the future, the market atmosphere of cautious wait-and-see gradually, so that the recent market price trend is mostly based on shock adjustment. In the steel market prospects are not clear, scrap continued to rise pressure still exists, it is expected that the scrap rebound time is not sustainable, the rise range between 50 to 100 yuan/ton. It is suggested that businesses adopt fast in and out operation to ensure the flow of funds, bag for security.
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wuxi xinke metallurgical equipment CO.,LTD
Copyright©2019 wuxi xinke metallurgical equipment CO.,LTD. ALL RIGHT