China buyers hail 1st steel scrap imports under new rule

Posted on 04 February 2021

Chinese steelmakers are celebrating the successful arrival of the first cargo of imported steel scrap to enter the country since new regulations governing scrap imports took effect from January 1.


According to an announcement released by the China Iron & Steel Association (CISA) on February 1, China’s General Administration of Customs cleared the first batch of imported recycling iron-steel material on January 29. The cargo, involving 3,002 tonnes of Japanese steel scrap, was bought by Ouyeel, a Shanghai-based steel e-trading platform incorporated and managed by China Baowu Steel Group Co, from Japanese trader Mitsui & Co.

CISA said the cargo was officially purchased on January 1, arrived in China on January 20 and was cleared through Shanghai port’s Longwu wharf on January 29. Japanese sources say the consignment was mostly HS grade scrap.

“This (deal) has brought some hope to the Chinese steel mills, especially to those that had applied for steel scrap import quotas before,” a Shanghai-based market watcher told Mysteel Global. Previously, before new standards for steel scrap were decided by China’s central government and commencing from January 1, Chinese scrap processors and traders were obliged to bid for monthly import quotas, as Mysteel Global reported.

“When the steel scrap import restrictions were abolished, steel mills were uncertain about the imports environment. However, this transaction has helped some domestic steel mills gain confidence in importing steel scrap,” she added.

Prior to the re-opening, Chinese mills and traders were unsure about how strict the Chinese Customs inspections might be, or whether additional freight handling fees might apply, she explained, but as the arrival and processing of the first cargo seems to have gone smoothly, they have gained some confidence and are trying to import as well, she noted, adding that some steel mills have tabled inquiries with overseas scrap suppliers just to test prices.

An official from a steel mill in East China’s Zhejiang province confirmed that his company has asked their scrap suppliers in Japan and the United States for their latest offering prices.

“We had not been interested in importing steel scrap before, as domestic scrap prices had been lower than international prices for long. However, recently the significant plunge in international scrap prices has made it more competitive for us, so we are considering importing some quantities if the price is appropriate,” he said. Japanese scrap exporters in Tokyo say they are being inundated with inquiries “day after day” from Chinese importers, large and small, seeking offer prices.

Besides this transaction by Ouyeel quoted by CISA, another three cargoes of the Japanese scrap have been reportedly booked by Chinese buyers in recent weeks and are scheduled to arrive in China around February-March, Mysteel Global understands, and Zhejiang Judong Company, a scrap recycling and processing company in Zhejiang province, is among the three that has booked 2,800 tonnes of HS-grade steel scrap from Japan-based Chinese steel trader Heiwa Shoji in January which is expected to arrive in China early this month.

Shagang Group in East China’s Jiangsu province brought 3,000 tonnes of scrap from Japanese steel scrap supplier Hanwa, which is scheduled to sail from Japan in the second-half of February and arrive at China in late February, which the Japanese sources say this too is HS grade and that the price Shagang paid was above the prevailing market price at the time, possibly because Shagang was eager to secure scrap for its Chinese New Year (CNY) production.

Ansteel in Northeast China’s Liaoning province also booked a cargo of 2,000 tonnes of scrap from Hanwa – also believed to be HS – which is expected to ship before late February and arrive in China’s Bayuquan port in Liaoning in early March, which was interpreted by the Japanese sources as an illustration of the willingness to import rather than any urgent need to secure scrap for its CNY production.

Source : Mysteel Global