Since June, scrap steel prices have fallen several times. Taking East China 6 heavy waste as an example, the average price of heavy waste is 2,115 yuan/ton, a year-on-year decrease of 16%. In June, the price of scrap steel has risen as the enthusiasm of finished materials enters the off-season. The editor will analyze it from the following points.

1: Cost inverted, iron scrap price difference

As of now, the cost of iron and water in East China (excluding tax) is 2,028 yuan/ton, and the cost of 6 heavy waste in East China is 2,115 yuan/ton. Since the cost of molten iron is lower than that of scrap steel, long-process steel companies prefer to increase the use of molten iron, resulting in a decrease in scrap steel usage. Short-process steel companies have continued to decline in profits and production time has dropped to a low level. As of now, the price difference between rebar and scrap steel has shrunk to 708 yuan/ton. According to the latest data, the profit of valley power in Fujian Province is -77 yuan/ton.

2: Scrap steel resources are relatively small, and the site losses are serious

3: Steel companies are cautious in purchasing and keeping inventory low

In general, the impact of the high temperature and rainy season in June is that the arrival of steel companies is low. In addition, the finished materials enter the off-season, and the profit is inverted. The current iron cost is 2,026 yuan/ton, which is an advantage over scrap steel. Therefore, long-process steel companies reduce the use of scrap steel. The production time of short-process steel companies has also decreased again and again. According to Fubao's survey, the capacity utilization rate of 104 electric furnace factories nationwide was 39.2%, a decrease of 0.6 percentage points from last week. The number of electric furnace steel factories in production was 87, a decrease of 1 from last week, accounting for 83.6%. In the long run, steel companies have inverted profits and have poor demand for scrap steel, so they mainly purchase on demand. The supply side has now entered the high-temperature plum rainy season, and there is relatively little scrap steel resources. With both supply and demand weak, scrap steel prices have limited room for short-term growth, and steel companies mostly adjust their operations in a narrow range according to their own arrival situation.