Local scrap downtrend continues in China, offer-bid price gap for imports widens

In the first part of the past week, the news of further production curbs in Tangshan which will last until the end of this year exerted a negative impact on scrap prices as some steelmakers halted their purchases of scrap. In the latter part of the given week, raw material and finished steel prices have indicated rebounds, bolstering scrap prices to some extent. Nevertheless, prices for import scrap have remained under pressure and the price gap between import offers and bids has widened further.

Average domestic HMS scrap prices in China are at RMB 3,324/mt ($510/mt) ex-warehouse, decreasing by RMB 50/mt ($7.7/mt) compared to March 17, according to SteelOrbis’ information. 

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

Further rumors have indicated that Jiangsu Province may also implement production curbs, which may negatively affect the scrap market, though the strict implementation of emissions reductions and carbon dioxide emissions measures will provide support for scrap prices in the future as EAF-based steelmaking can reduce carbon emissions.

Weak raw material market sentiment in China has continued to put pressure on the import scrap prices. Bids for ex-Japan HS scrap are at $465-470/mt CFR, stable compared to early this week, but $15/mt lower compared to last week. Trading activity has been slack, as not only have buyers been asking for discounts, but sellers have also been inactive in offering, due to the lack of availability of vessels for transportation from Japan. Some rare offers from Japan have been reported at $475-485/mt CFR or even above. The recent hike in the local billet market in China has increased hopes for a rebound in the scrap market, according to sources, but for now no visible improvement has been seen.

$1 = RMB 6.5228