Over the past week, some regional markets in China (especially in the east) have witnessed an increase in scrap prices. The steel mills had previously lowered their purchase prices for scrap, but this resulted in a sharp reduction in scrap supplies; as a result, in recent days the mills have started to raise their purchase prices again. Meanwhile, the softening seen in the Chinese steel market is expected to exert a negative effect on the domestic scrap market.
Product name | Specification | Place of origin | Price (RMB/mt) | Weekly change (RMB/mt) | Price ($/mt) | Weekly change ($/mt) |
HMS scrap | > 6 mm | Jiangsu | 3,130 | +30 | 459 | +4 |
Shandong | 2,850 | - | 418 | - |
Scrap prices observed a slight increase in some regions in China over the past week. Current mainstream quotations of heavy scrap in Jiangsu Province are at the level of RMB 3,070-3,130/mt ($450-459/mt), up RMB 30/mt ($4/mt) week on week while the purchase prices in this province for shredded scrap are at RMB 3,150-3,200/mt ($462-469/mt), up RMB 50/mt ($7/mt) week on week. In Hebei Province, mainstream purchase prices of steel mills for heavy scrap have remained at RMB 2,950-3,000/mt ($433-440/mt). Meanwhile, market prices of heavy scrap in the northeastern region are standing at RMB 2,950-3,050/mt ($433-447/mt), unchanged week on week, with scrap prices in Hubei province at RMB 3,000-3,100/mt ($440-455/mt).
The turnaround observed in the scrap markets can be attributed to the tight supplies of scrap in general, and also to the reduction in the scrap import volume.
Meanwhile, the weak situation in the steel market is also likely to be extended to the scrap market in the coming period. Currently, the ex-works prices of the Chinese major steelmakers for June are generally trending from neutral to slightly down, with Jiangsu-based Shagang lowering its ex-works price for rebar by six percent. The pessimistic view of the mills as regards the prospects for the steel market may have a negative influence on the domestic scrap market.
Meanwhile, the scrap import market is still characterized by weakness. Since quotations of scrap imports are far higher than the price of domestic scrap, scrap imports are unlikely to attract any interest from Chinese buyers unless they fall below $400/mt CFR.