Chinese scrap market sees decline in some regions

Over the past week the Chinese scrap market maintained its bearish performance against a background of sliding prices. Influenced by scrap imports and also by the relatively low cost of pig iron, demand for domestic scrap in China has become increasingly soft in recent days.

The Chinese scrap market retained its softness in the past week, with downward movement seen in prices in the northeastern regions. At present, mainstream quotations of heavy scrap in Jiangsu Province are in the range of RMB 2,250-2,300/mt ($330-337/mt), while the purchase prices of some mills in this province for shredded scrap stand at RMB 2,350-2,400/mt ($344-352/mt). Meanwhile, the purchase prices of northeastern-based mills are down by RMB 100/mt ($15/mt) or so to RMB 2,200-2,300/mt ($323-337/mt).

Still characterized by slack commercial activity, China's domestic scrap market failed to see any improvement as regards trading performance, with a moderate price decline observed in some regional markets. Given the descending finished steel prices, the Chinese mills recently curbed or even suspended their purchases of scrap and other raw materials, exacerbating the bearish mood in the scrap market. In the northeastern regions, last week local mills made obvious downward adjustments to their purchase prices in line with the market trend.

The Japanese scrap market has been on a rising trend over the past few weeks, leading to a minor increase in export prices from that country. Currently, Kanto-based Tetsugen Group is offering H2 heavy scrap at an average level of $223/mt FOB, while the latest deal price for Japanese scrap to Taiwan is around $250/mt C&F. Meanwhile, Japan's offers to South Korea remain constant at $240-250/mt CFR. In addition, the C&F quotations of H1 heavy scrap from the US to South Korea are in the range of $248-250/mt.