Domestic scrap prices in China move downwards, weak demand for imports

Major Chinese steelmaker Shagang Group has cut its scrap purchasing prices two times this week following previous continuous rises amid the downward corrections in ferrous metal futures prices and local steel prices in China, weakening the support to scrap prices. Import activity has fallen this week and the price gap between offers and bids has increased much.  

Average domestic HMS scrap prices in China are at RMB 3,805/mt ($591.2/mt) ex-warehouse, decreasing by RMB 94/mt compared to May 12, according to SteelOrbis’ information. 

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

In the first part of the given week, sharp rises in finished steel prices pushed up scrap prices, while ferrous metal futures prices have decreased sharply in the latter part of the given week, exerting a negative impact on steel prices and scrap prices. Jiangsu-based Shagang Group has cut its scrap purchase prices by RMB 80/mt ($12.4/mt) as of May 18 and by RMB 50/mt ($7.8/mt) as of May 16, signalling its bearish view of the future prospects for the market, negatively affecting scrap prices.

Demand for import scrap in China has weakened since late last week after the fall in finished steel prices. Japanese scrap suppliers have been bullish and have increased their prices for HS scrap to $570-575/mt CFR. But bids from China have been at a much lower level. Sources report that the tradable value is hardly above $510-530/mt CFR at the moment and workable prices have dropped by $10-20/mt from last week.

$1 = RMB 6.4255