SteelOrbis Shanghai
The Chinese scrap market maintained its previous trend of slight fluctuation over the past week, but continued to be characterized by overall stability. Some mills in Hubei and Shandong hiked their purchase prices by a small margin; however, this did not have any impact on the neighboring markets. In July, the domestic scrap market is expected to continue its fluctuating movement against a background of strong market demand and high market prices.
On July 4, the market prices of heavy melting scrap in eastern China had remained constant compared to a week ago at RMB 2,300-2,350/mt ($303-310/mt). The mainstream purchase prices of mills in Shandong Province were unchanged at RMB 2,250-2,300/mt ($296-303/mt). The purchase prices of mills in northern China were at RMB 2,200-2,300/mt ($291-303/mt), while purchase prices in the central southern regions were at RMB 2,250-2,300/mt ($296-303/mt) - all equal to the levels of the previous week. Furthermore, Hubei Province-based Wuhan Iron & Steel Co. Ltd. raised their purchase price of heavy melting scrap by RMB 50/mt ($7/mt) to RMB 2,270/mt ($299/mt).
Coming up to July, the domestic scrap market mainly moved on a stable trend. Meanwhile, mills in all the regions were standing aside and waiting to see which way the market would move. Some mills had previously given out low purchase prices, leading to a slump in their stock inventory. These mills subsequently raised their price level by a sufficient degree to relieve the tightness in their scrap supply. Based on the current situation, the scrap market is likely to remain steady on the whole, with no significant movements expected in the short run.
China's steel market has faced mixed price movements recently. Although the construction steel market has shown a positive tendency, the market for hot rolled and some other products registered a moderate decline. Thus, affected by the soft performance in the finished steel market, mills were cautious in their approach to scrap purchases. In the short term, the scrap market is expected to remain stable.
Nevertheless, the demand for scrap in the second half of this year is still expected to be strong. The general price level of domestic pig iron continues to remain high, posting a price gap of RMB 350-400/mt ($46-53/mt) compared to scrap. As a result, most mills will still tend to use scrap in consideration of the remarkable price difference. Moreover, China's scrap imports for the Jan-May period shrunk greatly, by 53 percent, compared with the same period last year, and this will surely stimulate the consumption of domestic scrap in the near future.