Product cuts cause China’s scrap demand to collapse, but prices rise amid tight supply

Wednesday, 20 October 2021 16:24:08 (GMT+3)   |   Istanbul
       

The continued production limitations in China have continued to ripple across the Chinese domestic scrap market and have exerted direct negative pressure on scrap buying activity. In particular, even following a certain easing of restrictions, the utilization rates of Chinese electric arc furnaces (EAF)-based steelmaking mills have failed to reach 50 percent, with China’s largest private steelmaker, Jiangsu-based Shagang Group, said to have decreased its production significantly again. However, a certain shortage in supply in the domestic market and the uptrend seen in the global market have encouraged Chinese steelmakers to increase their bids for domestic scrap in order to obtain material. Meanwhile, import scrap has remained mostly unattractive for Chinese customers. “There is no point talking about import scrap activity now. Chinese customers are even refusing to accept $570-575/mt CFR price for basic pig iron, while scrap is definitely above $620/mt CFR,” an Asia-based trader commented.

Meanwhile, average domestic HMS scrap prices in China have increased by RMB 18/mt compared to October 12, to RMB 3,839/mt ($599/mt) ex-warehouse, according to SteelOrbis’ information.

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

Product name

Specification

Origin

Price
(RMB/mt)

Price
($/mt)

Weekly change
(RMB/mt)

Weekly change
($/mt)

HMS

scrap

> 6 mm

Tianjin

3,930

611.1

0

+1.6

Liupanshui, Guizhou

3,820

594.0

+120

+20.2

Nanchang, Jiangxi

3,775

587.0

0

+1.5

Handan, Hebei

3,930

611.1

+10

+3.2

Anyang, Henan

3,870

601.8

-30

-3.1

Zhangjiagang, Jiangsu

3,810

592.4

-10

0.0

Jinan, Shandong

3,735

580.8

+35

+7.0

Average

3,839

596.9

+18

+4.3

$1 = RMB 6.4069


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