Scrap prices rebound slightly in northern China

Given the improvement seen in China's finished steel market and the low scrap prices in the north, the northern China scrap market registered a minor rebound over the past week. Since the future still contains many uncertainties, the domestic scrap market continues to face great pressure.

Scrap prices in eastern China posted a general stability in the past week, with a slight rise seen in the purchase prices of northern mills. At present, mainstream quotations of heavy scrap in Jiangsu Province are in the range of RMB 2,300-2,350/mt ($337-345/mt), while the purchase price of some mills in this province for shredded scrap stands at RMB 2,400/mt ($352/mt). Meanwhile, the purchase prices of northeastern-based mills are up by RMB 50/mt ($7/mt) or so to RMB 2,250-2,300/mt ($330-337/mt), with the purchase prices of some Tianjin mills up to RMB 2,300-2,350/mt ($337-345/mt).

As a result of the slight ascension observed in prices of construction steel and of flat rolled products, scrap demand in the domestic market has begun to show certain improvements in recent days. With limited supplements of imported materials, the northern market has been experiencing supply shortages of scrap. As a result, considering the relatively low purchase prices for scrap, mills in Tianjin and Heilongjiang hiked their purchase prices successively. Some market players reckon that the mills raised their purchase prices so as to keep up with the market levels, which makes it easier for them to source material.

Looking at the current situation, strong pressure still exists in the domestic finished steel market given the substantial outputs of crude steel, the sluggish export market and the high inventory levels. In this context, most market players are not very optimistic about the prospects for the future. Following its temporary rebound, the scrap market will continue to face downward pressure from the finished steel market in the coming period.