China’s local scrap market moves down slightly, bids for imports also down

Demand for scrap has been slack in China, weakening prices. Production curbs and the downtrend in iron ore prices in the first part of the given week negatively affected the scrap market, resulting in cautious sentiments among market players. Meanwhile, offers for import scrap from Japan have declined this week amid weaker sentiment in Asia, while Chinese buyers have lowered their bids by a further slight margin, following the deals concluded late last week.

Average domestic HMS scrap prices in China are at RMB 3,374/mt ($519/mt) ex-warehouse, decreasing by RMB 39/mt ($6/mt) compared to March 10, according to SteelOrbis’ information.

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

During the given week, capacity utilization rates of downstream steelmakers rose slowly, resulting in rises in scrap inventory levels. Ferrous metal futures prices have moved up and then down, negatively affecting scrap prices. However, steelmakers’ demand for scrap is expected to be better amid the expected improvement in demand for finished steel in late March and April, which may provide support for scrap prices.

A downtrend has persisted in Japanese scrap export prices over the past week. Suppliers have faced lower bids from the majority of Asian importers and also bearish sentiment in the local market. Offers for HS from Japan to China have been coming at $490-500/mt CFR lately, down from $500/mt CFR last week. The latest bookings were at $485/mt CFR from Japan and South Korea, down by $5-10/mt over the past week, but stable compared to Friday, March 12. For now, bids from China for import HS are $480-485/mt CFR.

$1 = RMB 6.4978