Continuing its pre-National Day holiday (Oct. 1-8) downward trend, over the past week China's domestic scrap market has continued to be characterized by sluggishness of both supply and demand, with frequent downward adjustments observed in the purchase prices of various mills. Since the domestic steel market has still not shown any sign of halting its decreasing movement, local scrap prices are likely to be driven down further in the future.
Product name | Specification | Place of origin | Price (RMB/mt) | Weekly change (RMB/mt) | Price ($/mt) | Weekly change ($/mt) |
HMS scrap | > 6 mm | Jiangsu | 2,500 | -80 | 367 | -12 |
Shandong | 2,550 | - | 374 | - |
China's domestic scrap market has maintained its soft trend during the past week, with reductions made by various mills to their purchase prices. At present, mainstream quotations of heavy scrap in Jiangsu Province are in the range of RMB 2,450-2,550/mt ($369-374/mt) while the purchase prices of some mills in this province for shredded scrap are at RMB 2,550/mt ($374/mt), both down by RMB 80/mt ($12/mt) week on week. Meanwhile, market prices of heavy scrap in Shandong Province and Tianjin have remained constant at RMB 2,500-2,600/mt ($367-381/mt).
According to the current situation, the sliding price levels of finished steel in the domestic market still constitute the main factor driving down scrap prices in China. At present, the mainstream prices of HRB 335 rebar in Shanghai have declined to the level of RMB 3,270/mt ($479/mt). Thereby, with the profit margin of steelmakers squeezed further, the price gap between scrap and HRB 335 rebar has reached RMB 800/mt. If steel prices fail to see a halt to their declining movement in the short term, China's scrap market will continue to move down on the whole.
Currently, there are only limited scrap supplies in the Chinese market, since most scrap suppliers are adopting a cautious approach to market trading in the wake of the previous significant price fluctuations. Moreover, it has become quite hard for overseas scrap to flow into the Chinese market in recent days. Although the international scrap prices are also on a downward trend, the decline range is much smaller compared with that in the Chinese market. At present, US HMS I/II 80:20 is offered at $260-270/mt FOB, with the import prices of this material to China standing at $330-340/mt CFR. After calculations, the actual prices of ex-US HMS I/II 80:20 in the local Chinese market are at around RMB 2,700/mt ($396/mt), thus totally lacking any price advantage. As a result, it will be difficult to see deals for imported scrap concluded in China in the coming period.