Posted on 26 Jun 2023
China's total imports of ferrous scrap recorded an on-month decrease of 35.5% to approximate 41,464 tonnes in May, according to the country's General Administration of Customs (GACC), reflecting Chinese buyers' cooling interest in overseas ferrous scrap cargoes.
In particular, the imports from its top steel scrap supplier Japan declined by a large 33.6% from April to reach 23,482 tonnes last month, with the volume accounting for around 56.6% of the country's total imports of the material, the data showed.
"Actually, Chinese steelmakers' demand for steel scrap dropped significantly last month, and the decline was not only seen in mills' needs for overseas cargoes but also detected in their demand for domestic scrap products," a Shanghai-based market watcher observed.
For example, the steel scrap utilization in steelmaking among 211 Chinese steelmakers including both integrated and electric-arc-furnace steel mills fell by 1.12 percentage points on month to 19.94% by the end of May, according to Mysteel's survey.
"One reason behind the decrease was mills' trimming of steel output in response to the listless steel demand during the traditional off-season for steel consumption and many steelmakers' persistent losses on producing steel," the market watcher explained.
Another reason was the fact that scrap was losing price competitiveness in steelmaking compared with hot metal, its primary substitute, according to her.
By end-May, the weakening of domestic coke prices saw production cost of hot metal in East China's Jiangsu move down by Yuan 180.8/tonne ($25.3/t) on month to Yuan 2,406.7/t, while the price of 6-8mm common-grade carbon steel scrap in Zhangjiagang city also in Jiangsu hovered higher at Yuan 2,420/t, both excluding the 13% VAT, Mysteel's tracking data showed.
Adding another Yuan 53/t for the impurities in scrap to the cost of steelmaking, the overall cost of producing steel with scrap was Yuan 66.3/t higher than that with hot metal by the end of May, Mysteel Global calculated.
"Consuming steel scrap has already been more costly in steelmaking compared with hot metal, using overseas scrap products was even more expensive," she commented, adding that by the end of May, the Japanese prices for HS scrap materials were about Yuan 470/t higher than domestic scrap prices.
China imported a total 271,817 tonnes of ferrous scrap over January-May, GACC data showed.
Source:Mysteel Global
