Slight corrections in some Chinese regional scrap markets

Due to the softening observed in China's steel market, in the past week a slight decrease has been witnessed in some regions in China's domestic scrap market. Currently, domestic mills and scrap traders are in wait-and-see mode, waiting for the market situation to gain clarity.

Scrap prices have followed a sideways to downward trend over the past week. Current mainstream quotations of heavy scrap in Jiangsu Province have remained at RMB 3,100-3,250/mt ($455-462/mt) while the purchase prices in this province for shredded scrap remain at RMB 3,150-3,250/mt ($462-477/mt). In Hebei Province, mainstream purchase prices of steel mills for heavy scrap are at RMB 2,950-3,050/mt ($433-447/mt), unchanged week on week. Meanwhile, market prices of heavy scrap in Shandong Province are standing at RMB 2,850-2,900/mt ($418-425/mt), down RMB 50/mt ($7/mt) week on week, and scrap prices in the central regions of China have remained at RMB 2,900-3,000/mt ($425-440/mt).

After the significant price increase seen in the domestic scrap market last week, the market has trended sideways this week, with a slight decrease observed in some regions. Looking at the current market situation, due to the general weakness observed in the domestic steel market, with relative big decreases in mainstream products such as HRC and rebar, some mills have started to lower their purchase prices for scrap.

During the week in question, purchase prices in Jiangsu were generally neutral compared with the previous week; mills in this area fear supply shortages since traders are reluctant to sell their materials at lower prices. During the week, local mills in Shandong Province lowered their purchase prices by RMB 50/mt. Currently, a wait-and-see approach prevails in the domestic scrap market, and it is expected that an overall price decline will occur in the market if the domestic steel market fails to limit its downtrend.