China’s scrap market enters a stable trend

Over the past week China's domestic scrap market generally remained stable, with a minor rise observed only in certain individual regions. While scrap prices in China had previously been boosted by the rebound of local steel prices, as a result of the slide in the steel market the domestic scrap market has again entered a stable trend.

During the past week China's domestic scrap market has maintained its previous levels on the whole. At present, mainstream quotations of heavy scrap in Jiangsu Province are in the range of RMB 2,500-2,550/mt ($371-374/mt) while the purchase prices of some mills in this province for shredded scrap are at RMB 2,550-2,600/mt ($374-381/mt). Meanwhile, market prices of heavy scrap in Shandong Province and Tianjin have remained constant at RMB 2,500-2,600/mt ($367-381/mt).

The Chinese scrap market has indicated an overall stability throughout the past week, with certain hikes made by some regional mills to their purchase prices. At present, in most regions the majority of scrap traders are adopting a cautious approach to market trading. Looking at the current situation, domestic mills have seen a minor rise in production costs due to the increased raw material prices; at the same time, most of them appear to lack confidence in the prospects for the future trend of steel prices, especially due to the continuing existence of high inventory and high output levels. In this context, most large scale mills are standing aside from scrap purchase activity for the time being. It is thought that the Chinese scrap market will indicate a slight rise in the short term, but will still lack sufficient upward momentum.

With regard to the international market, scrap prices have remained at relatively low levels in recent days. Currently, import prices of US HMS I/II 80:20 are now at $300/mt CFR, while quotations of H2 scrap from Japan are down to $285/mt CFR.