China’s scrap market rises strongly in eastern regions

Over the past week, a considerable overall upward movement was again recorded in China's domestic scrap market. At the beginning of the past week, eastern-based mills hiked their ex-factory prices sharply, giving strong impetus to local scrap prices.

China's domestic scrap prices surged significantly throughout the past week. At present, mainstream quotations of heavy scrap in Jiangsu Province are in the range of RMB 2,900-2,950/mt ($425-432/mt) while the purchase prices of some mills in this province for shredded scrap are at RMB 3,000-3,050/mt ($439-447/mt) - marking an overall increase of RMB 200/mt ($29/mt) week on week. Meanwhile, the purchase prices of Hebei-based mills are also up by RMB 200/mt ($29/mt) to the level of RMB 2,800/mt ($410/mt).

Boosted by soaring finished steel prices, the scrap purchase prices of various mills also climbed up continuously in the past week, with an increase of RMB 200/mt ($29/mt) observed in the eastern China scrap market. As a result of the expansion of steel production, demand for scrap saw a continuous increase, and many scrap traders preferred to hold on to their stocks. Moreover, in order to secure raw materials, some small-scale mills bought in scrap at high price levels, making it harder for large and medium mills to source sufficient supplies of material, and this also contributed to the ascension of scrap prices.

In recent days, scrap prices in eastern China registered an overall rise, under the influence of leading local mill Shagang. After Shagang raised its construction steel prices by RMB 500-600/mt ($72-88/mt), a hike of RMB 200/mt ($29/mt) was also seen in its purchase prices for scrap, thus significantly pushing up overall eastern scrap prices. Following the continuous rise of finished steel prices, the likelihood of a correction in the near future has increased somewhat. It remains to be observed whether scrap prices will maintain their rising trend.