Chinese steelmakers’ reduced profitability weakens local scrap demand

Tuesday, 03 September 2019 15:02:31 (GMT+3)   |   Shanghai
       

As of September 3, steel scrap prices in the Chinese domestic market have declined on week-on-week basis, while transaction activity in the overall market has been at low-to-medium levels. Average scrap prices in China’s main markets are presented in the following table. 

Product name

Specification

Origin

Price
(RMB/mt)

Price
($/mt)

Weekly change
(RMB/mt)

Weekly change
($/mt)

HMS

scrap

> 6 mm

Tianjin

2,780

392.2

-10

-1.4

Liupanshui,Guizhou

2,580

364.0

-20

-2.8

Nanchang,Jiangxi

2,500

352.7

-10

-1.4

Handan,Hebei

2,700

380.9

-20

-2.8

Anyang,Henan

2,600

366.8

-70

-9.9

Zhangjiagang,Jiangsu

2,580

364.0

-100

-14.1

Jinan,Shandong

2,725

384.5

-45

-6.3

Average

2,638

372.2

-39

-5.5

All prices are ex-warehouse and include 13 percent VAT.

During the given week, some Chinese steelmakers cut their scrap consumption due to shrinking profit margins, while other steelmakers who have been incurring serious losses cut their production, weakening the demand for scrap. Meanwhile, the downtrend of finished steel prices has also exerted a negative impact on scrap prices. Although finished steel prices have rebounded in the past two days, demand for finished steel has remained slack due to the rainy weather conditions, which will also negatively affect demand for scrap. In the past two trading days, iron ore futures prices have indicated sharp rises, bolstering finished steel prices and scrap prices. It is expected that scrap prices in the Chinese domestic market will edge down slightly in the coming week. 

$1 = RMB 7.09


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