Scrap market is stable and strong

According to estimates, after the Spring Festival, affected by the fluctuation of ore and billet prices, the scrap market as a whole showed a stable and strong operating trend. However, as most of the local businesses have not yet returned to the market, the overall market trading situation is not ideal.
From the positive factors, during the Spring Festival, due to the continuous fermentation of the dam break accident of the tailings dam in Brazil, the supply of iron ore is expected to decrease, and its price trend is rapid.

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During the holiday season, the 62% iron ore index rose rapidly, breaking through the $90/ton mark, setting a new high since August 2014. Although the price of iron ore has dropped slightly in recent days, there is still a certain increase compared with that before the Spring Festival. The rise in iron ore prices has led to an increase in the cost of molten iron, which has supported steel prices and thus indirectly formed a favorable outlook for the scrap market.

In addition, after the Spring Festival consumption, steel mills' scrap inventory has declined to varying degrees. In order to supplement the scrap inventory, some steel mills have increased their enthusiasm for procurement. However, because local businesses are still on vacation, the market for scrap steel resources is relatively scarce, so the recent arrival of steel mills is relatively low.

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Judging from the negative factors, the recent billet prices have fluctuated and fell, which has created a certain negative for scrap. After the Spring Festival, although the billet price has risen sharply. However, as the speculative mood gradually released, billet prices began to fall back.
Although the trading situation in the steel market after the holiday is still acceptable, in the case that the downstream construction site has not yet been fully started, the transaction is mostly a replenishment behavior before the start of construction, which is difficult to sustain.

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According to the situation in previous years, the real terminal demand will be launched gradually from the 15th to the March of the first month. Therefore, steel prices lack the momentum to continue to rise, and the upside of scrap steel will be subject to certain constraints.