Scrap imports in China still unattractive compared to local, prices for both down

Having suffered a further decrease in their margins amid lower finished steel prices this week, Chinese steelmakers have not taken long to cut their purchase scrap prices in order to offset their losses. An absence of any signs for a recovery in the nearest future has supported steelmakers. In particular, Jiangsu-based Shagang Group, China’s largest private steelmaker, has cut its scrap purchase prices two consecutive times within the past week, signaling its bearish sentiments as regards the future prospects for the market. Following the latest revision, Shagang’s heavy scrap purchase price now stands at RMB 3,480/mt ($544/mt) delivered, including 13 percent VAT, as SteelOrbis reported earlier. Given the current developments, import scrap offers from Japan have remained unattractive for the Chinese steelmakers, even taking into account the significant decrease of $40/mt over the past one to two weeks. Specifically, while ex-Japan HS scrap is currently offered to China at $560/mt CFR, Chinese customers are unlikely to book material above $495/mt CFR.

Meanwhile, average domestic HMS scrap prices in China are at RMB 3,464/mt ($541.9/mt) ex-warehouse, decreasing by RMB 223/mt compared to November 3, according to SteelOrbis’ information.

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

$1 = RMB 6.3948