Scrap buying interest rises in China, but offer-bid price gap remains for imports

With the Chinese New Year holiday approaching and scrap supply becoming tighter in the domestic market in China, Chinese steel mills have increased their scrap purchase prices in order to secure feedstock. The stable uptrend of the ferrous metal futures market in China has made Chinese steelmakers optimistic towards the future market developments. Although bids for import scrap have risen as well, Japanese scrap suppliers are not in a hurry to accept price levels in negotiations with Chinese customers, as they are still enjoying high prices in their domestic market and also given recent developments in South Korea. Specifically, this week rare offers for ex-Japan HS scrap have been heard at $550-555/mt CFR, while more and more Chinese customers are ready to negotiate prices at $510/mt CFR and above. Some bids have been heard even at $530/mt CFR this week, though with no results yielded yet. A week ago, the workable scrap prices for Chinese customers were not higher than $505-510/mt CFR.

Meanwhile, average domestic HMS scrap prices in China are currently at RMB 3,612/mt ($567.2/mt) ex-warehouse, increasing by RMB 76/mt compared to January 5, according to SteelOrbis’ information. 

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

$1 = RMB 6.3658