The weakness in the local Japanese scrap market has continued this week. This signals a possible further decline in export scrap prices from Japan, which may trigger higher demand from Chinese customers.
The first batch of Japanese HS scrap to China, which was booked on January 1, when the ban on imported scrap was lifted, is going to be delivered to a Chinese customer this week, though with some delay.
The latest deal for ex-Japan HS scrap to China was heard to have been done at about $470-475/mt CFR early last week, down by $10-15/mt from the previous offer level. Moreover, by the end of the week, negotiations were held at an even lower level - down by $5-10/mt CFR.
At the moment, the tradable price level for ex-Japan HS scrap is assessed at $450-455/mt CFR China, taking into account the latest small-tonnage sale of the same scrap grade from Japan to S. Korea. Though there has been no confirmation of a sale at this new price level to China recently, sources believe that more deals will be disclosed in the market soon since “prices [for Japanese scrap] come closer to local prices,” a trader said. In Jiangsu Province, where one of the largest scrap consuming mills, Shagang Group, is located, the suitable import price level for buyers is at around $440/mt CFR (+/- $5/mt).
Last week, Chinese customers started negotiations with other scrap suppliers, from Europe in particular, and sources said that the first contracts could be done before the Chinese New Year holiday.