Local Chinese scrap prices rise, offer-bid gap for imports still too high

During the current week, Chinese steelmakers have continued to revise their scrap purchase prices. Due to the low availability of scrap locally, most customers have been forced to increase their purchase prices in order to obtain material. Nevertheless, the activity in the import segment has remained muted chiefly due to the divergence between offers and bids. “Import scrap is totally out of the range of interest here. Pig iron is more attractive, while it is coming into China now at $535/mt CFR,” a major Chinese trader stated. Even though the bids for scrap from Chinese buyers have risen over the past week to $520-530/mt versus $515-520/mt CFR a week ago, they are still at least $45/mt lower than the levels targeted by Japanese suppliers.

Meanwhile, average domestic HMS scrap prices in China are at RMB 3,782/mt ($586.1/mt) ex-warehouse, having increased by RMB 53/mt compared to September 1, according to SteelOrbis’ information. 

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

While in the coming week scrap prices will likely fluctuate within a limited range, in the longer term period the ongoing environmental protection measures and the resulting lower production in China may exert negative pressure on scrap prices, SteelOrbis believes.  

$1 = RMB 6.4674