Li Shubin, vice chairman of the China Association of Metal scrap Utilization (CAMU) at the 2020 National Steel Scrap Conference in Haikou in South China’s Hainan province predicted that steel scrap prices across China are likely to keep strengthening in the remaining few weeks of 2020.

“Earlier this year, the lower scrap production amid the COVID-19 pandemic nationwide led steel scrap supplies to tighten, which supported domestic scrap prices and kept them at a relatively high level,” Li added.

Mysteel’s steel scrap index as of November 11 had increased to Yuan 2,679/tonne ($394/t) on delivery and including the 13% VAT from one week earlier to reach the highest level since April 2013.

Compared to imported iron ore and its persisting high prices, steel scrap continues to have competitive advantages for steel mills, though scrap prices have steadily strengthened recently.

Lie added that in order to contain their production costs within an acceptable range, “most steel mills are adding more steel scrap during their steelmaking processes to ensure steady steel output.”