Local scrap prices in China tumble, making imports impossible

Average scrap prices in the Chinese domestic market have moved down sharply compared to the previous week, following losses in rebar futures prices, cuts in steel production and weak fundamentals for the near future. In these conditions, scrap imports have become impossible, as the gap between offers from Japan and the tradable levels in China has widened significantly.   

Average domestic HMS scrap prices in China are at RMB 2,607/mt ex-warehouse, moving down by RMB 156/mt on average compared to April 19, according to SteelOrbis’ information. 

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

During the given week, scrap prices in the Chinese domestic market have seen big decreases amid the declining trends in ferrous metal futures prices and finished steel prices in the spot market. The daily scrap consumption of steelmakers has decreased compared to the previous week, exerting a negative impact on scrap prices. Bearish sentiments have prevailed among market players. Since the Labor Day holiday (April 29-May 3) is approaching, demand for scrap may not improve. It is thought that scrap prices in the Chinese domestic market will likely continue their downtrend, though with a slower declining pace in the coming week. 

The latest tradable level for ex-Japan HS scrap from the suppliers’ side was at JPY 54,000/mt ($403/mt) CFR, moving down by JPY 1,000/mt ($7.5/mt) compared to April 19. However, this level is nominal, since the selling price to South Korea was higher last week and Japanese suppliers would be better off waiting for new bids from Hyundai Steel rather than actively offering to China, where prices will be unworkable. Buyers’ price ideas for import HS scrap would hardly be above $370-375/mt CFR, down by $20/mt over the past week. 

$1 = RMB 6.9237