Local scrap prices in China soften due to weak steel market

Average scrap prices in the Chinese domestic market have moved down compared to two weeks ago even though inventories at mills have not been so high after the long holiday. The weak steel market and low-to-negative margins have been the main reasons for the bearish mood in the scrap market in China.

Average domestic HMS scrap prices in China are at RMB 2,627/mt ex-warehouse, decreasing by RMB 32/mt on average compared to two weeks ago, according to SteelOrbis’ information.

Average scrap prices in China’s main markets are presented in the following table:

During the given week, scrap prices in the Chinese domestic market have moved on a downtrend due to the quiet activity during the long holiday. Currently, most production bases have resumed production, while transaction activities for scrap have also improved. However, on October 10, Jiangsu-based Shagang Group, China’s largest private steelmaker, cut its scrap purchase price by RMB 50/mt ($7/mt), signaling cautious sentiments as regards the future prospects for the scrap market. Inventory of scrap has been at relatively low levels, which will bolster prices to a certain degree. But demand for steel has not been so good, exerting a negative impact on the scrap market. It is expected that scrap prices in the Chinese domestic market will likely edge down slightly in the coming week.

The latest ex-Japan HS scrap tradable price has declined by $5/mt over the past two weeks to $375-380/mt CFR.

$1 = RMB 7.1779