Bearish commercial activity in Chinese scrap market

SteelOrbis Shanghai Chinese heavy melting scrap market moved stable on the whole with flat trading performances. On November 29, heavy scrap prices in Zhangjiagang, southern China were constant at RMB 2,000/mt ($255/mt), while those in Alashankou, northern China were also steady at RMB 1,810/mt ($230). Due to the low inventory and transportation problem, some steel mills such as Yonggang, Wuxi Xuefeng, and Changzhou Zhongtian hiked their purchase prices by RMB 30/mt ($) in week 47. Recently, Shagang's purchase price of heavy scrap grade 1 is at RMB 2,070/mt ($265), and that of heavy scrap grade 2 is at RMB 2,040/mt ($261). The mainstream prices of heavy scrap in southwestern and northwestern regions are around RMB 1,900-2,000/mt ($243-255), with bearish trading performance. In northern China, since there is some transportation problems, the supply has been little. Therefore, prices sustained stability despite the sluggish commercial activity. At present, the heavy scrap purchase price of Shougang is at RMB 2,100/mt ($268) and that of Tangshan Steel is at about RMB 1,850/mt ($236). In recent days, scrap prices increased in international market. Therefore, the costs of imported scrap also followed the upward trend. Nevertheless, the rapid gain in RMB/USD exchange rate relieved the cost pressure by a certain extent. For the future, influenced by the price increase of domestic iron ore, steel mills are likely to raise the purchase quantity of heavy scrap. Thus, the future market trend may differ in various regions.