China: Ferrous scrap imports plunge m-o-m in Sept’21

China’s recycled steel raw materials, or ferrous scrap import volumes, in Sept’21 dropped by around 50% on a m-o-m basis. The world’s leading steel producer imported 20,519 tonnes (t) of ferrous scrap in Sept’21 as compared to 40,540 t in the previous month, as per customs data maintained with SteelMint.

On a y-o-y basis, however, China saw a humongous growth in scrap imports compared with 1,211 t in Sept’20.

Why did scrap imports fall?

1. Scrap imports into China fell as lack of buying interest persisted due to production cuts and power issues which widened the bid-offer gap, latest data by SteelMint showed.
2. Data from the National Bureau of Statistics (NBS) shows, China’s crude steel output totalled 73.75 million tonnes (mn t) in Sept’21, a y-o-y decrease of 21.2%. The average daily crude steel output in September was at 2.45 mn t, a decrease of 8.5% m-o-m.
3. Also, mills preferred more of imported billets over scrap. China recorded billet imports of 1.34 mn t in Sept’21, up by 41% m-o-m as compared to 0.95 mn t in Aug’21, as per customs data collated by SteelMint.

• Imports from Japan fall: Chinese mills imported 11,750 t of scrap from Japan in Sept’21, a sharp drop of 59% as against 28,722 t in the preceding month, marking its lower-most volume after February. Chinese mills refrained from concluding deals for Japanese ferrous scrap due to bid-offer disparity.

Chinese buyers reduced bids for HRS101 material due to low preference for scrap owing to dull demand and instead chose to buy semi-finished steel at workable prices to meet their requirements.

• Import volumes from South Korea drop: South Korean mills exported a total of 2,170 t of ferrous scrap to China in Sept’21, a massive fall of 62% as compared to 5,637 t in the previous month. Following this was Canada which supplied 1,621 t to China in September.

Outlook

For the remaining months of CY’21, market sources expect China’s seaborne scrap trading activity to remain correspondingly muted, as Chinese steelmakers will continue to reel under pressure amidst production and power cuts. Hence, they are more likely to procure scrap domestically rather than opt for imports.