ASIA STEEL SCRAP DIGEST: Lower-cost Russian scrap emerges in China market

Lower-priced Russian-origin steel scrap offers to China were heard on Friday August 13, but prices were still not low enough to entice Chinese buyers to enter the market.

  • Russian-origin scrap at lower prices still unattractive to Chinese buyers
  • Chinese domestic scrap prices continue descent
  • South Korea import scrap market quiet during Japan holiday

China import
Offers for 2,000 tonnes of Russian-origin plate and structural (P&S), which is generally of equivalent quality to heavy scrap (HS), were heard at $530 per tonne cfr China, sources told Fastmarkets on Friday August 13.

Recent sales for bulk Russian scrap were heard at $495 per tonne cfr South Korea for 90,000 tonnes of A3 material in early August, but with Korean mills hesitant to pay above $480 per tonne cfr for bulk scrap on Friday, added to lower steel prices in the Russian market, cheaper scrap is now available from the country.

Offers from Japan were still in the range of $585-590 per tonne cfr China for HS, but volumes were limited with Japanese suppliers away from the market for the Obon holidays August 12-16.

“This price definitely gives Russian cargo advantages over [cargoes from] markets such as Japan and South Korea,” a mill source based in Hebei province told Fastmarkets. “But it is still higher than our domestic scrap buy price. Mills in the Tangshan region which normally pay higher for scrap might be able to accept the price.”

The highest bids for imported steel scrap into China were heard at $510-515 per tonne cfr northern China on Friday.

Fastmarkets’ daily price assessment for steel scrap, heavy recycled steel materials, cfr China, which takes into account prices at ports in eastern China, was $520-530 per tonne on Friday, unchanged from a day earlier.

China local
Demand for domestic steel scrap from Chinese mills remained low this week amid reduced production levels.

“Both demand and supply [of domestic scrap] are weak now. Demand for the material from mills is dampened by production curbs and restrictions on electricity usages,” a Chinese scrap industry analyst based in Beijing told Fastmarkets. “Besides, iron ore prices decreased sharply recently, which makes molten iron more attractive in term of steel production costs, so some steel mills lowered their scrap intake volume.”

“On the supply side, cross-regional transportation for domestic scrap in some cities was restricted in the past week due to the measures taken to control the Covid-19 epidemic,” the industry analyst added.

Fastmarkets’ weekly price assessment for steel scrap heavy scrap, domestic, delivered mill China, was 3,720-3,760 yuan ($574-580) per tonne on August 13, down by 50 yuan from 3,770-3,810 yuan on August 6.

Disregarding VAT, that puts the China domestic scrap price at $500-505 per tonne, $25-30 below the lowest import offer price in the market at $530 per tonne cfr.

South Korea
Scrap trading activity has cooled off in the South Korea import market over the last week amid the absence of Japanese sellers, as well as due to large stock levels for lower-grade material, sources said.

Shredded scrap in bulk from Japan was heard sold at ¥60,000 ($543) per tonne cfr Korea this week, working out at ¥56,000 per tonne fob Japan. However, many other deals did not work out due to gaps between Japanese suppliers and buyers.

“We tried offering HS to South Korea, but the price from the buyer was not workable for the supplier,” a Japanese trading source said. He added that Shindachi was even more difficult to supply, with sellers asking around ¥65,500 per tonne fob, but with no guarantee of even a September shipment, given the expected reduced generation at automakers during the Obon holiday.

On the Korean deep-sea market, activity was minimal, with market participants instead watching the moves of Vietnam. “If Vietnam has paid $495 per tonne cfr for deep sea HMS 1&2 (80:20), then South Korean buyers must be at $480 per tonne cfr because the costs of freight, financing and claims selling to the Korean market are much lower than to Vietnam,” a Taiwanese trader said.

A South Korean steelmaker source said that $480 per tonne cfr may be an acceptable price for deep-sea HMS 1&2 (80:20), but added that his mill was “out of the market” on Friday.

Fastmarkets’ weekly price assessment for steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr South Korea was $480-490 per tonne cfr on Friday, down $5-10 from $490-495 per tonne one week before.

Decarbonization complicates an already complex marketplace. Our latest analysis, ‘The true price of green steel’, takes a deep dive into the ripple effects that overhauling the markets will have on the steelmaking process and supply base.

(Due to a typographical error, the offers for HS from Japan in the China import section were stated as $685-690 per tonne cfr China when this report was originally published. This has been corrected to $585-590 per tonne.)

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