FOCUS: Chinese scrap demand supported by expensive hot metal costs

Soaring iron ore prices have pushed Chinese hot metal costs up above those for ferrous scrap over recent months, stimulating greater use of the secondary raw material, according to calculations by Fastmarkets’ research team.

Fastmarkets’ Steel Cost Service updates for the first and second quarters of 2019 detail average global integrated (BOF-route) plant’s crude steel costs rose to an average of $419 per tonne in the first half of 2019; up from $394 per tonne a year earlier. In contrast, electric arc furnace (EAF) equivalent costs have fallen to levels below their integrated peers.
China’s domestic heavy melt scrap price in July reached its highest average level since early 2013, averaging 2,718-2,840 yuan ($394-411) per tonne delivered including VAT, 20% higher than the price one year back.

Despite these rising prices, scrap in recent months has become cheaper for Chinese mills to procure than hot metal – the name given to blast furnace (BF) iron. This is because iron ore prices have risen even more sharply, with July’s China import 62% Fe iron ore prices recording their highest monthly average...

Published

Lee Allen

Paul Lim

August 02, 2019

17:21 GMT

Singapore, Shanghai, London