For the first four months of 2005, the U.S.,
Japan,
Australia,
Russia and several
Far East countries were among the main exporters of steel
scrap to
China.
The largest global
scrap supplier, the U.S., exported 10.92 million tons of
scrap in 2004. Of that number, 40% of went to
China and
Korea, 30% to
Canada and
Mexico, while the remaining 30% went elsewhere.
As the largest
scrap consumer in the world,
China imported 2.78 million tons of
scrap from the U.S., accounting for 25% of the U.S.'s total export quantity.
As for
scrap prices,
scrap suppliers on the U.S. east coast quoted the highest export price of HMS1 & shredded
scrap to Asian countries for the first quarter of 2005. Prices reached $295-305/ton C&F during the first quarter, but have since declined to $290-300/ton. Furthermore, the price of superior structural
scrap (BONUS) has decreased below $300/ton in Mid-February 2005.
H2
scrap prices from
Japan to
China have risen nearly 12%, from $245/ton before the Spring Festival to $275/ton in Mid-March 2005. As
China's neighbor,
Japan's H2
scrap export price is associated closely with the prices of finished steel products in
China's domestic market. During the past few weekends, the latest H2
scrap price has decreased to around $250/ton, down 9% against its peak price due to the comprehensive price decrease in
China scrap market.
In light of this situation, some Japanese
scrap suppliers have temporarily stopped signing
scrap supply contracts, choosing to adopt a wait-and-see attitude instead.
The transaction situation of Chinese steelmakers that have imported
scrap from other countries can be summarized as follows: The highest transaction price of H2
scrap in
Japan is $278/ton, that of shredded
scrap in America has been $300/ton, and that of 80%-20% mixed HMS in America has been $295/ton.
As for superior
scrap, a few transactions have been concluded because major steelmakers have shown a reluctance to accept
scrap prices of more than $300/ton.
In year-on-year terms,
China's
scrap imports dropped off considerably in the first quarter of 2005. The main reasons can be summarized as follows:
1. The
scrap price in international markets has operated steadily at a high level, with slight price increases. In addition, the ex-factory price of finished steel products in and out of
China is still higher than that of the market price.
Driven by
scrap market
consumption,
scrap import will rely on finished steel products' prices in major
consumption markets.
Specifically, for the first quarter of 2005 the global
scrap market maintained 2004's trend of rising prices. International
scrap price quotations have approached those of last year, while the quotations in
China's domestic steel market are far lower against than the prices prior to Beijing's implementation of various macro-controls. Thus, global
scrap is concentrated in America and
Europe, where the price of finished products has been high, and some
Southeast Asia countries (
India and
Thailand etc.)
2. At the beginning of 2005, the
scrap inventory of major steelmakers in
China was 3.61 million tons, up 400 thousand against that of 2004. This shows that the social
scrap inventory has been rich.
Meanwhile, in order to cope with the price rise situation in the international
scrap market,
China's steel enterprises have taken various positive measures that have improved steel recycling in
China.
According to the analysis, the social
scrap recycling quantity is forecasted to reach 38 million tons in 2005, up about 15% against that of 2004. As crude steel output has increased by 11% against that of 2004, Chinese steelmakers' reliance on imported
scrap will be alleviated slightly.
3. Steel enterprises' composite macro-control has caused the social effect and sentiment panic on
scrap market, which has further led to the comprehensive price decrease and thus restrained
scrap imports.