Chinese steel scrap prices followed an upward trend during last week, supported mainly by the rapid decline in scrap availability in the market. Kallanish assessed 6mm+ heavy scrap delivered to mills in eastern China's Yangtze River Delta at CNY 2,733/tonne ($372/t), including VAT, on Friday. This is CNY 2/t lower from Thursday but up CNY 27/t from a week before.

Data from information provider Fubao show that 49 independent electric arc furnace mills in China reported a 46.6% op rate last week, down 1.2 percentage points from the previous week. The decline in scrap supply was exacerbated by the lower mill utilization rates, leading to the rebound in scrap prices despite weak demand.

However, market participants expect China will likely lift scrap imports in 2024, as several Chinese mills sought seaborne scrap in late November because of a substantial rise in domestic steel prices. The optimism was short-lived, as the surge in prices was sentiment-driven without any increase in steel demand.

Financial concerns over struggling developers have also posed headwinds for the housing sector in China. This resulted in potential homebuyers holding back on new home purchases, which weighed on steel and scrap prices. The Chinese steel market outlook remains uncertain, with volatility expected to continue in the coming months.