Scrap imports to China diminish, local scrap remains much more attractive

With bearish sentiments in the steel market mounting, Chinese steelmakers have been quick to lower their scrap purchase prices further. In particular, Jiangsu-based Shagang Group, China’s largest private steelmaker, has again cut its bids for scrap two consecutive times within the past week. Meanwhile, scrap imports has remained stagnant due to unworkable prices. Specifically, even with a further decrease in offers from Japan-based scrap suppliers by $10-20/mt this week to $540-550/mt CFR, the prices are still more than $100/mt higher than the Chinese steelmakers could get in the domestic market. Additionally, some steelmakers in northern China have started maintenance works, reducing the demand for scrap. “China will remain at this level for a while. Maybe the decrease has stopped or slowed down, but it will not rebound soon,” a China-based source commented with regard to the current situation.

On balance, average domestic HMS scrap prices in China are at RMB 3,109/mt ($486.3/mt) ex-warehouse, decreasing by RMB 354/mt compared to November 10, according to SteelOrbis’ information.

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

$1 = RMB 6.3935