Local Chinese scrap prices move down more rapidly, amid weak fundamentals

Average scrap prices in the Chinese domestic market have moved down compared to the prices recorded on August 7 and at a faster pace, following the sharp price declines in the steel market and for other raw materials like iron ore.

Average domestic HMS scrap prices in China are at RMB 2,280/mt ex-warehouse, decreasing by RMB 80/mt on average compared to previous week, according to SteelOrbis’ information. 

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

On August 12, major Chinese steelmaker Shagang Group cut its scrap purchase prices by another RMB 60/mt ($8.4/mt), following a RMB 60/mt cut on August 9, signaling ongoing cautious sentiments as regards the future prospects for the scrap market. At the same time, ferrous metal futures prices have seen continuous decreases, negatively affecting sentiments in the scrap market. Most market players have refused to build up stocks of scrap. It is thought that scrap prices in the Chinese market may see further declines in the coming week, as they have been declining less compared to prices of other raw materials, while EAF-based producers have been sharply cutting steel outputs.

The latest ex-Japan HS scrap offer prices have been heard at JPY 52,100/mt ($354/mt) CFR, decreasing by JPY 1,400/mt compared to August 7, while the dollar-based equivalent has fallen by $15/mt. Nevertheless, the tradable level is not above $320-325/mt CFR for Chinese buyers, down by $5-10/mt over the past week.

$1 = RMB 7.1415