Summary: China's 45-city heavy scrap average fell to 2,015 RMB/t on October 23, down 36 RMB from late September — a year-low. But scrap is only 60-70% of steel shot cost, so the pass-through to shot price is roughly 23 RMB/t, not 36. Here is how buyers should read the signal.

The raw material signal: 36 RMB down, 23 RMB passed through

On October 23 the national average for heavy scrap across 45 cities stood at 2,015 RMB per tonne. At the end of September the same index read 2,051 RMB. That is a 36 RMB decline, or 1.8%, in four weeks.

Buyers often assume the full 36 RMB should come off the shot price. It does not. Scrap accounts for 60-70% of steel shot production cost; at 65%, the theoretical pass-through is about 23 RMB per tonne.

The rest of the cost stack does not follow scrap at all. Melting, atomising, quenching, tempering and screening together carry 15-20% of cost in electricity and natural gas, priced locally and largely independent of the scrap market. Screening yield also varies by size: fine grades below S230 return less finished product per tonne of raw material than S460.

Demand has not collapsed — order books run to 2030

On October 24, Xinhua reported that Tianjin's marine equipment sector grew value-added output 37.2% year on year in the first three quarters, with 95 companies in the offshore engineering chain producing 238.2 billion RMB, up 6.3%. Dalian Shipbuilding Industry's Tianjin yard holds an order book approaching 50 billion RMB, with production scheduled through 2030 and overseas orders above 85%.

On October 23, PowerChina issued a tender for jacket fabrication on the Yingkou offshore wind Y1 and Y2 sites, 700 MW combined, with substructure delivery required before May 10, 2027. On October 20, the Honghai Bay III project awarded 16.7 MW foundation and installation work covering 12 jackets and 12 towers.

For abrasives this is hard demand. A single offshore wind jacket blasted to Sa 2.5 consumes 3-5 tonnes of media. One 30-metre tower section, inside and out, takes about 2 tonnes.

Why the floor is closer than it looks

The scrap decline is being driven by steel mills, not shot producers. Mill scrap inventories recovered to 5.1027 million tonnes after the holiday, arrivals rose while consumption held flat, and on October 23 mills in Hunan, Jiangxi, Jiangsu and Gansu cut purchase prices by 10-30 RMB/t. The China Iron and Steel Association's October 21 statement called for disciplined output cuts to draw down inventory.

At 2,015 RMB/t, heavy scrap is already near the cost line of processing bases, and the shredded scrap index at 1,993.77 RMB/t is a year-low. Push further and social inventory withholds — processing yards run low-stock, quick-turn operations and simply stop selling when squeezed.

The read: near-term weakness with limited downside, and no case for a sharp rebound either.

How to buy: split the quarter, do not bet on the market

A workable structure for blast rooms and coating plants:

Use existing stock down by 40% to cover November and keep the warehouse turning. Lock 50% of December-January volume at today's quote with a floating adjustment clause so a further dip still benefits you. Leave 10% open for urgent orders.

For a shop consuming 20 tonnes a month, that structure ties up roughly 120,000 RMB in working capital. Buying three months at once ties up 360,000 RMB — the extra 240,000 RMB matters at year-end.

One more constraint: shot stored beyond six months risks caking and size segregation, particularly in humid climates. Old batches need re-screening before use.

The number that matters more than price: cycle life

When scrap is cheap, some producers blend lower-grade charge. Sulphur and phosphorus rise, non-spherical particles rise, and the unit price looks attractive while consumption per square metre climbs.

Under standard Q/HX 001-2026, non-spherical particles must stay at or below 5%, sulphur and phosphorus at or below 0.03%, density at or above 7.4 g/cm³, and cycle life at or above 2,200 cycles, with a test report per batch.

The arithmetic: raising non-spherical content from 5% to 15% increases consumption about 30% at the same Sa 2.5 finish. Saving 200 RMB per tonne on 20 tonnes a month saves 4,000 RMB; burning 30% more media costs over 20,000 RMB. The cheap option loses about 16,000 RMB a month.

FAQ

Q: When will steel shot prices follow scrap down?

A: Typically 2-4 weeks behind. Scrap is 60-70% of shot cost, so a 36 RMB drop in heavy scrap translates to roughly 23 RMB per tonne of shot. Electricity and gas, at 15-20% of cost, do not track scrap, so the shot decline is smaller than the raw material decline.

Q: Should we stock three months of steel shot before year-end?

A: Not in one purchase. Split it: consume 40% of existing stock, lock 50% of the next quarter, keep 10% open. Buying three months at once ties up three times the working capital and raises caking and segregation risk for material stored beyond six months.

Q: What separates cheap shot from good shot?

A: Non-spherical particle ratio and sulphur/phosphorus content. Q/HX 001-2026 requires non-spherical particles at or below 5%, S and P at or below 0.03%, and cycle life at or above 2,200 cycles. Going from 5% to 15% non-spherical raises consumption by about 30%.

Q: Can you guarantee delivery in December?

A: Standard grades ship within 72 hours from stock in Hubei and surrounding warehouses. Freight tightens from mid-December, so order 5-7 days ahead. Non-standard specifications require production scheduling, typically 7-10 days.

Mali Steel Shot (Wuhan Hongxin Lixin Metal Products) has supplied metallic abrasives for 25 years: alloy steel shot S230-S780, stainless steel shot 0.3-2.5 mm, high-carbon and high-manganese cut wire shot, and angular steel grit G12-G120. 28 warehouse bases nationwide, test report with every batch, free samples available.

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