Local scrap market in China resists further drop after aggressive falls

Average scrap prices in the Chinese domestic market have moved down significantly over the past week due to falling demand, the downtrend in steel prices and the prevailing bearish sentiments. However, by the middle of this week, market sources have said that sellers are resisting further price reductions and that prices are unlikely to continue the same trend, at least at such a pace, in the near future.

Average domestic HMS scrap prices in China are at RMB 2,482/mt ex-warehouse, decreasing by RMB 114/mt on average compared to the previous week, according to SteelOrbis’ information.

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

During the given week, scrap prices in the Chinese domestic market have plummeted further with Jiangsu-based China’s largest private steelmaker Shagang Group cutting its scrap purchase prices by RMB 50/mt ($7/mt) on both March 15 and March 16. Supplies of scrap have been sufficient, exerting a negative impact on prices. Following continuous decreases in scrap prices, market players have been unwilling to sell at low prices, providing support for the market. It is expected that scrap prices in the Chinese market will fluctuate within a limited range in the coming week.

The latest tradable level for ex-Japan HS scrap in China has been assessed at $345-350/mt CFR, down sharply from $360-365/mt CFR last week. However, offers have been far above these levels, at $370-380/mt CFR.

$1 = RMB 7.0968