Posted on 24 Jul 2023
China's imports of ferrous scrap totalled 36,256 tonnes in June, falling for the second straight month and by a marked 12.6% from May, according to the country's General Administration of Customs (GACC). The cost effectiveness of imported materials remained weak for Chinese scrap users, Mysteel Global learned.
Imports from China's top steel-scrap supplier, Japan, also declined by 15.4% on month to reach 19,872 tonnes in June, with the volume accounting for 54.8% of the country's total imports, the GACC data showed.
"Chinese users were less interested in purchasing steel scrap from the overseas because the import prices were much higher than those of domestic materials," a market analyst based in Shanghai commented.
For example, over June 1-30, Mysteel's assessment of spot transaction prices of 6-8mm common-grade steel scrap in Zhangjiagang in East China's Jiangsu province averaged Yuan 2,544/tonne ($355/t), while Japanese prices for HS scrap averaged some $412.5/t CFR, both excluding the 13% VAT.
On the other hand, the widening spread between the costs of producing hot metal in the blast furnace and substituting more steel scrap in the converter prevented Chinese steel mills from lifting their scrap use – another factor behind the decline of scrap imports, the Shanghai-based analyst noted.
By end-June, the production cost of hot metal in Jiangsu stood at Yuan 2,501/t, while the scrap price in Zhangjiagang hovered at Yuan 2,580/t, both excluding the 13% VAT, according to Mysteel's assessment.
Given that another Yuan 53/t should be added to the cost of steelmaking for removing the impurities in scrap, the overall steelmaking cost with scrap was some Yuan 131.7/t higher than that with hot metal, as Mysteel assessed, and the cost spread was Yuan 65.4/t wider than in the end of May.
During January-June this year, China imported a total 308,073 tonnes of steel scrap, higher by a significant 141% on year, mainly due to the low base for the first half of last year, GACC data showed.
Source:Mysteel Global
