ASIA STEEL SCRAP DIGEST: China demand rises amid relaxation in power rationing

Less stringent restrictions on power supply in some areas of China have led to a boost in steel production levels and ferrous scrap demand at some mills in recent days, sources told Fastmarkets on Friday October 15.

• Less strict power rationing helps support China scrap prices
• Import prices in China inch up amid higher bids from buyers
• South Korea buys high-grade Japanese scrap.

There have been some relaxations in electricity rationing in the week to Friday in the southern part of China, in provinces such as Guangdong, Guangxi and Jiangsu, sources told Fastmarkets.

As a result, some privately owned electric-arc furnace (EAF) mills were heard to be resuming or ramping-up their production this week. Major Chinese steelmakers in Jiangsu province raised their domestic scrap buy prices by 100 yuan ($15.54) per tonne on October 12 to increase their scrap intake volumes, according to sources.

Fastmarkets’ weekly price assessment for steel scrap heavy scrap, domestic, delivered mill China, was 3,770-3,860 yuan ($586-600) per tonne on October 15, up by 80-90 yuan per tonne from a week earlier. Disregarding VAT, this put the China domestic scrap price at $510-522 per tonne.

The rise in output in some areas also led to a more positive environment for imports of scrap into the country.

The highest bids for imported HRS101-grade steel scrap were heard at $540 per tonne cfr north China on Friday, up by $10 per tonne day on day. Key market participants believed that $530-540 per tonne cfr north China would be the prevailing market level for imported steel scrap into China on October 15.

Offers of such material from Japan remained strong at $615-630 per tonne cfr China, much higher than the prices that buyers in China could afford, sources told Fastmarkets on Friday.

“The import scrap market [in China] has been quiet in recent months. Apart from the extremely high Japanese offers, we have not heard any offers of material from other countries at all,” a mill source in Hebei province said.

Fastmarkets’ calculation of the steel scrap, index, heavy recycled steel materials, cfr north China, was $537.92 per tonne on October 15, up by $4.79 per tonne from a day earlier.

South Korea
Prices for imports of steel scrap have continued to increase in South Korea over recent days, amid strong offers from sellers in both the United States and Japan and continued low supply in the local scrap market.

On Thursday, a major Korean mill bid ¥52,000 ($458) per tonne fob for bulk Japanese H2 scrap, ¥60,000 per tonne fob for shredded scrap, ¥61,000 per tonne for HS scrap and ¥67,000 per tonne fob for Shindachi Bara scrap. Fastmarkets heard on Friday that Shindachi was sold to the mill at ¥67,000 per tonne fob Japan.

H2-grade material in bulk was offered around ¥54,000-56,000 per tonne fob Japan on Friday, according to a South Korean mill source, but no deals have been heard for this grade in recent days.

Fastmarkets’ price assessment for steel scrap H2, Japan origin, import, cfr main port South Korea, was ¥56,500-58,500 per tonne on Friday, widening upward by ¥2,000 per tonne from ¥56,500 per tonne last week.

Deals were heard for Russia A3 scrap in a 27,000-tonne lot at $534 per tonne cfr South Korea and for a 32,000-tonne cargo from Australia at a price of $522.50 per tonne cfr Korea for HMS-grade material earlier this week. Further deals were made difficult by a spike in deep-sea scrap offer prices, however, with offers for US-origin HMS 1&2 (80:20) heard at $545 per tonne cfr Korea by the end of this week.

Fastmarkets’ weekly price assessment for steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr South Korea, was $522.50-535.00 per tonne on Friday, up from $510-515 per tonne one week before.

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