Scrap prices rise in China, but not enough to stimulate import activity

Wednesday, 13 October 2021 16:50:57 (GMT+3)   |   Istanbul
       

Having resumed work after the National Day holiday in China and seen a certain shortage in supply in the domestic market, Chinese steelmakers have been encouraged to increase their bids for scrap in order to obtain material. However, taking into account the recent upsurge in global prices, in particular for scrap from Japan, the divergence between offers and bids remains. Taking into account that before the holiday ex-Japan scrap at $610-620/mt CFR had failed to attract any interest, now after the upward adjustments offers are entirely out of the range of workable levels for the Chinese market. For now, any price higher than $540/mt CFR is hardly likely to attract the attention of Chinese steelmakers. “The import scrap market in China is bad now amid uncertainty stemming from the continuous developments in the state’s policy as regards production restrictions,” a China-based source commented.

Meanwhile, domestic scrap prices have to some extent risen over the past two weeks. The stance of major Chinese steelmaker Shagang Group has given a certain degree of support to the market. In particular, as SteelOrbis reported earlier, on October 12, the company raised its scrap purchase price by RMB 100/mt ($15.5/mt), showing its optimistic view of the near-term prospects for prices in the scrap market. Subsequently, domestic scrap prices have increased in almost all regions in China. On balance, current average domestic HMS scrap prices in China are at RMB 3,821/mt ($592.5/mt) ex-warehouse, increasing by RMB 44/mt compared to September 29, 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

609.5

30

5.9

Liupanshui,Guizhou

3,700

573.8

0

1.2

Nanchang,Jiangxi

3,775

585.5

0

1.2

Handan,Hebei

3,920

607.9

10

2.8

Anyang,Henan

3,900

604.8

85

14.4

Zhangjiagang,Jiangsu

3,820

592.4

100

16.7

Jinan,Shandong

3,700

573.8

85

14.3

Average

3,821

592.5

44

8.0

Moreover, certain relaxations of production restrictions and power supply limitations after the holiday have resulted in higher production capacity utilization rates at steelmakers, giving additional support to the domestic scrap market. Consequently, it is not excluded that prices will edge up further in the coming week.  

$1 = RMB 6.4612


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