CHINA STEEL SCRAP: Bullish sentiment pushes up prices

Prices for steel scrap imported into China rebounded after bullish sentiment dominated Chinese steel markets on Friday June 11, sources told Fastmarkets.

Fastmarkets’ daily price assessment for steel scrap, heavy recycled steel materials, cfr China, which takes into account prices at ports in eastern China, was $530-540 per tonne on Friday, up $10-20 from $510-530 per tonne a day earlier.
The most traded rebar and hot-rolled coil futures contracts on the Shanghai Futures Exchange (SHFE) closed higher by 3.74% and 3.13% respectively on Friday afternoon.
Chinese traders were energized after the rise in futures and physical ferrous markets on Friday, with some trading companies bidding as high as $540-550 per tonne cfr northern China for heavy scrap (HS) - equivalent to around $530-540 per tonne cfr eastern China.
But one mill source in Hebei province told Fastmarkets they would still not bid above $520 per tonne cfr, while a second mill source in the region said $520-530 per tonne cfr would be the highest price they could pay.
After keeping their prices stable for three weeks, major steelmaker Shagang raised its purchase price for domestic scrap again on Friday June 11. The mill increased its domestic scrap purchase price by 100 yuan to 3,690 yuan ($578) per tonne delivered mill, inclusive of a 9.2% value-added tax (VAT). 
“Many mills have raised their purchase prices for domestic scrap because the scrap arrival volume was lower,” a Hebei province mill source said.
Offers for HS from Japan were heard at $560 per tonne cfr China on Friday.
A Chinese trading source said that a price of $540 per tonne cfr northern China - equivalent to around $530 per tonne cfr eastern China - would be workable to buyers. While an Eastern Chinese mill source told Fastmarkets that a price of $530-540 per tonne cfr eastern ports would be acceptable for buyers in that region on Friday.
“The futures market for finished steel products turned bullish recently, which also buoyed buyers’ acceptable prices for imported ferrous scrap. But this was still lower than the offer prices from Japanese suppliers,” a key Japanese exporter source told Fastmarkets.
“We're still waiting for cargoes booked before to arrive so our interest in importing scrap is low,” a second mill source from Hebei province said.
Knock-on to other Asian markets
The rebounding futures and steel prices in China has made scrap sellers become more optimistic after the recent purchasing lull in Vietnam, Fastmarkets heard.
"If prices rebound, then there will be more demand for imported scrap from Vietnamese steel mills," a Vietnamese trader told Fastmarkets on Friday June 11.
Optimistic market participants are also bullish on spot price trends due to South Korea purchasing at least two deep-sea import cargoes this week at $510-515 per tonne cfr on a heavy melting scrap (HMS) 1 basis.
Taiwanese buyers are still bidding at $435-440 per tonne cfr late this week, resisting sellers' attempts to increase offers on bullish sentiment in the US domestic markets. There were transactions concluded, however, at $440-442 per tonne cfr Taiwan this week, sources said.
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Lee Allen

lee.allen@fastmarkets.com

Paul Lim

paul.lim@fastmarkets.com

Tianran Zhao

tianran.zhao@fastmarkets.com

Published

Lee Allen

Paul Lim

Tianran Zhao

June 11, 2021

10:52 GMT

Shanghai, Singapore