Chinese Steel Mills Posted Notable Surge in Scrap Inventory

SEATTLE (Scrap Monster):  The global scrap prices are reportedly facing dramatic decline, mainly on account of muted demand due to impacts of COVID-19. The prices are expected to witness further decline in the forthcoming months due to rapid spread of the virus to more countries across the globe.

The temporary shutdown or production cuts at many steel mills in order to adjust to declining market demand situation has resulted in drastic decline in scrap consumption. Also, drop in economic activity in major economies has led to overall scrap supply shortage. For instance, in Italy-one of the worst affected countries- the scrap supply to idled steel mills has come to a standstill, as mills have decided not to stock scrap materials. The drop in supplies is feared to result in price hike.

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Meantime, the scrap demand in China picked up marginally as EAFs in certain regions of the country resumed production. However, the scrap prices are likely to remain under pressure in the near-term as mills are said to be having enough stock of scrap. As per statistics, the scrap inventory with Chinese steel mills is currently around 1.88 million tons, which is significantly higher by over 5% from the prior week.