The Scrap Steel Market Under Macroeconomic Disturbances: A Transformation Brewing Amid Resilience.

2025-11-07 16:15:54

On the macro level, the current situation in Iran and the latest decision of the Federal Reserve have triggered shocks in the global market, driving a rapid rebound in commodities such as raw fuels represented by crude oil. At the interest rate level, the Federal Reserve announced that it would keep the benchmark interest rate unchanged at 4.25%-4.50%, and the dot plot shows that the median interest rate expectation for 2025 will remain at 3.9%, and two interest rate cuts are expected. The impact of this policy shift on the scrap steel market is mainly through two paths: first, the phased weakening of the US dollar index has reduced the cost of imported raw materials denominated in US dollars, especially for coastal steel mills that rely on overseas resources, the cost advantage brought by exchange rate fluctuations may stimulate them to increase the purchase of imported iron ore, but the Fed's emphasis on "inflation stickiness" still makes the market vigilant, if the follow-up core inflation data exceeds expectations, the recurrence of monetary policy may trigger violent fluctuations in commodity prices, In the future, price volatility of commodities, including black, may begin to amplify.

From the perspective of the supply side, the phased contraction of industrial waste and the change of resource mobility form a double constraint. Affected by the fluctuation of the manufacturing industry, the scale of waste production in automobiles, home appliances and other fields decreased by about 15%-20% compared with the same period in previous years, and the output of demolition scrap steel in some areas fell sharply by nearly 40%. This contraction is particularly pronounced in East China, where the pattern of dependence on outflow of resources is changing due to the increased absorption capacity of local processing bases. It is worth noting that the efficiency differentiation of the scrap processing industry is becoming more and more significant, and the base with large-scale processing capacity has compressed the unit processing cost below the industry average through process improvement, and this technological update is intensifying the reshuffle and competition pattern of scrap suppliers.

The structural adjustment on the demand side is more drastic. As the coke price pivot continues to move downward, the cost gap between molten iron and scrap has further widened to a range of 200-300 yuan per ton, and this spread effect is profoundly changing the production preferences of steel mills. By virtue of the value-added advantages of products, plate production enterprises have shown strong resilience in the downward cycle of the industry, and the adjustment of scrap steel ratio is significantly smaller than that of long product enterprises. It is worth being vigilant that the living space of electric furnace enterprises is squeezed by double - in the case of tight scrap resources, the lack of supply is easy to lead to the reduction or shutdown of electric furnace plants due to insufficient raw materials, on the other hand, the high cost of scrap procurement makes its operating profits squeezed, and at the same time. Some scrap companies admit that the current scrap procurement has fallen into the dilemma of "high price and high quality", and the rising comprehensive cost caused by the shortage of high-quality raw materials has become a key factor restricting profitability.

In the wrestling between cost support and demand suppression, scrap prices show a rare resistance to decline. Despite the intensified volatility in the futures market, the spot market price of 6mm heavy scrap has always remained resilient in the range of 2200-2250 yuan/ton, which is not only due to the fixed cost constraints of the processing link, but also related to the subtle changes in the procurement strategy of steel mills. It is worth noting that regional pricing power is quietly concentrated in the head enterprises, and some leading enterprises have successfully controlled the cost of scrap procurement at a low level in the industry through the establishment of regional procurement alliances, and the centralized release of this pricing power is changing the price changes in the scrap market.

Combined with the fundamentals of steel, the production of steel mills is relatively vigorous, but there is still a small phenomenon of destocking, the demand side of the fundamentals of finished products is still not bad, and the contradictions still need to wait for accumulation. After all, the off-season of 678 three months, the contradiction between supply and demand of finished steel may not gradually appear until the end of June and July.