Chinese steelmakers continue to favor local scrap, higher prices accepted

After Shagang Group raised its scrap purchase prices, scrap prices in the Chinese domestic market have as expected moved up. As SteelOrbis reported earlier, on August 17 Jiangsu-based Shagang Group, China’s largest private steelmaker, raised its scrap purchase prices by another RMB 150/mt ($22/mt), its fifth successive price increase, reflecting its positive sentiments for the scrap market prospects. Other circumstances have also contributed to the further rise in scrap prices in China. Specifically, widespread high temperatures in China have affected the transportation and circulation of scrap supplies, tightening supply in the market and bolstering prices. However, the rapid rise in scrap prices has shrunk the profitability of finished steel sales, which is likely to exert a negative impact on the scrap market. 

Meanwhile, no fresh deals in the import segment in China have been heard this week, though the latest offers for ex-Japan HS scrap at $380-400/mt CFR almost match the levels potentially workable for Chinese customers. 

Average domestic HMS scrap prices in China are at RMB 2,829/mt ex-warehouse, moving up by RMB 124/mt compared to August 10, according to SteelOrbis’ information. 

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

$1 = RMB 6.7863