Chinese scrap market dragged down further by lower Shagang bids

The recent announcement of new lower scrap purchase prices by Shagang Group has had a knock-on effect on local prices in the domestic scrap market in China. Accordingly, as SteelOrbis reported previously, Jiangsu-based Shagang Group, China’s largest private steelmaker, has cut its scrap purchase prices by RMB 50/mt ($7.8/mt), encouraging other Chinese steelmakers to revise their scrap purchase prices also. Moreover, the decrease in finished steel prices in China after a sharp drop in futures prices has aggravated the negative impact on the positions of scrap suppliers in China, with the downtrend expected to be maintained in the near future.

Meanwhile, import activity has continued to be muted due to the low viability of imports over supply locally. While ex-Japan scrap has been hardly available at below $600-620/mt CFR, the average local scrap price in China is translating to around $524/mt, excluding 13 percent VAT.

On balance, average domestic HMS scrap prices in China are standing at RMB 3,783/mt ($592.1/mt) ex-warehouse, decreasing by RMB 56/mt compared to October 20, according to SteelOrbis’ information.

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

$1 = RMB 6.3859