China's scrap market is experiencing challenges due to weak demand and supply constraints. The recent pessimism in the finished steel market has impacted the scrap market.

Demand for end-use steel remains low during this traditional off-season, limiting steel mills' production enthusiasm. Additionally, hot and rainy weather has hampered scrap processing and transportation. This has led to tight circulation resources in the short-term scrap market. In addition, the volatility in finished steel products has also reduced profit margins for electric arc furnace (EAF) steel mills, leading to increased production shutdowns and a decline in EAF capacity utilization.

Overall, with steel mills facing high finished steel stock levels, minimal production enthusiasm, and the cost of scrap remained less competitive compared to molten iron, consequently, the demand for scrap is unlikely to rise significantly in the near term. However, tight market circulation resources provide some support for scrap prices. The scrap market is expected to fluctuate and adjust in the near future.