In May of this year, the domestic scrap market as a whole showed a volatile upward trend. Industry analysts believe that the shortage of resources in the scrap market is the main reason for the recent increase in scrap prices. As the construction site and downstream processing companies started later this year, the overall output of scrap resources has decreased compared to previous years. Although the situation of tight resources in some areas improved slightly in May. However, most scrap traders still report difficulty in purchasing wool. In this case, merchants are reluctant to sell, and most steel mills have raised scrap purchase prices due to poor delivery.
In addition, the rising cost of hot metal production is also one of the main reasons for the recent increase in scrap prices. In the case of a significant increase in the cost of hot metal, the price advantage of scrap steel has expanded, and most steel mills have also increased their willingness to use scrap steel. In addition, the recent steel mill operation rate is high, and the demand for scrap steel has increased. As a result, scrap prices have risen.
Although the recent trend of finished products is not good, the overall downstream demand is acceptable, and steel inventories are in a state of decline. Although the steel market is about to enter the off-season in June, considering the late resumption of production this year, under the expectation of the release of demand for rush work, it is expected that the steel stocks will continue to decline in the future, which will form a support for steel prices and thus be beneficial to scrap.
In June, the busy agricultural season is coming. As workers return to the countryside to work in agriculture, the overall trading situation in the scrap market will weaken. With the gradual decrease of the flowable resources in the scrap steel market, it is difficult for steel mills to receive goods and the arrival volume drops. Some steel mills will increase their willingness to increase prices and attract goods.
In the middle and late June, the rainy season in the south strikes. With the increase of rainy weather, the construction site operating rate will be subject to certain restrictions. Under this circumstance, the end demand for steel products may be affected. This will be a negative for steel prices. As a result, scrap prices have fallen.
On the whole, although the recent scrap market has been slightly sluggish, the domestic scrap market is expected to run steadily in the first half of June in anticipation of the overall demand for steel products and the expected reduction in scrap resources. Affected by the rainy weather in the middle and late period, some areas may show a slight decline.