Though overall buying activity in the import scrap market in China has slowed down this week amid the sharp fall in futures prices and steel production curbs in Tangshan, by the end of the week some new deals have been reported in the country. Buyers have received discounts from suppliers and have decided to book some tonnage.
A contract for ex-S. Korea HS has been done at $485/mt CFR late this week. Also, the latest small bookings for ex-Japan HS have been at $485-490/mt CFR. In the middle of the week, the tradable price level was assessed by market sources at $490-495/mt CFR, but it has come down by $5/mt by Friday. Since late last week, prices for import HS scrap in China have lost $10/mt.
Lower bids and more attractive local quotations have forced suppliers to lower prices for Chinese importers. The outlook for next week is unclear as the recent rebound in futures and rebar and billet spot prices may provide support for scrap prices. The average local rebar price in China has increased by RMB 67/mt ($10/mt) to RMB 4,740/mt ($731/mt) ex-warehouse, according to SteelOrbis.
Steel production will be more controlled in Tangshan in the near future as the Ministry of Ecology and Environment will take measures against mills that broke emission restriction rules and that were producing steel at high rates, falsifying production records. The production in eastern China is unlikely to be impacted.
Nevertheless, prices for HS scrap in bookings to China are still at a premium compared to other Asian countries. For instance, the negotiation for Japanese HS have been held at $470/mt CFR in Vietnam. Hyundai Steel announced a bid for ex-Japan HS at JPY 47,000/mt ($433/mt) FOB, which corresponds to slightly over $460/mt CFR.
$1 = RMB 6.4845