China’s scrap imports slow on cheaper domestic supplies

Chinese steel producers' ferrous scrap imports were subdued in this year's first half, according to customs data, with a persistent price gap between domestic and seaborne scrap markets.

• China imported 27,012t of ferrous scrap during January-June, half the volume for the same period last year. Japan and Myanmar (Burma) were the primary suppliers.
• The ferrous scrap imports cover HS codes 720410, 720441 and 720449. Imports of alloyed and stainless scrap were relatively higher, totalling 54,890t and 59,489t respectively. Imports were negligible compared with China's scrap consumption of over 200mn t/yr.
• China has proposed revising its scrap import standards, with a draft revision released for public comment in May. The revised standard is expected to make importing scrap more feasible, although it has not been finalised yet.
• Low domestic prices in China have been the primary reason why steel mills were uninterested in seaborne material. China's domestic scrap prices have remained low this year because of sluggish steel demand.
• The Shagang No.3 heavy melted scrap price hit its lowest point this year on 26 July at 2,640 yuan/t, equivalent to $322.24/t without a 13pc value-added tax. Argus assessed HS scrap fob Japan at $350-380/t during January-July, a $60-90/t price gap after accounting for freight.