Is Chinese Ferrous Scrap Making Way in to South Asian Market?

Increase supply of Chinese origin scrap is catching market attention, especially in south Asian region.

Market participants have reported that number of scrap offers have increased in last few weeks. However, not many deals have been reported , but buyers are exploring this opportunity. Mills in India, Pakistan and Bangladesh are cautious in booking Chinese scrap owing to its quality.

“We are getting Chinese busheling scrap offers through traders at around USD 300/MT CFR India and Pakistan. We are not sure of the quality and would want to have market feedback before we book some material” said a trader based in India.

Currently no trade has been reported to India as all scrap coming to India requires a pre-inspection certificate through agencies approved by Indian government, he further added.

Another large trader based in UAE, heard to have sold 5,000 MT Chinese scrap to Pakistan at around USD 300/MT CFR.

Bangladesh based steel mills also confirmed of receiving Chinese scrap offers but no firm deal was reported. It is expected that China scrap may make its way to Asian market soon.

Last week, several thousand tonnes of China-origin scrap was booked by South Korean and Vietnam based steel mills. Reports suggest price levels of USD 260-270/MT CFR levels. Other markets are keeping a close watch on this development.

Supply of Chinese scrap exports continue to concern the global seaborne scrap trade. Since their presence from past two weeks, steel mills in far East Asia have had minimal appetite for US heavy melting scrap.

Industry experts believe that, China products and infrastructure is entering in the replacement phase, which will fuel the availability of obsolete scrap in the domestic market.

In time, this shift will have a significant impact on trends in scrap consumption both in China and globally.

Many market participants including China-based traders continue to question how Chinese scrap exports are coming out at such competitive prices despite the current 40% export tax as well as a 17% VAT levied on Chinese scrap exports.