China’s ferrous scrap imports witnessed a sharp increase in H1 CY’21 after easing of import restrictions. China imported 0.3million tonnes (mn t) of ferrous scrap in Jan-Jun’21, sharp increase y-o-y as compared to just 10,000t in Jan-Jun’20. Import volumes into China rose on vigorous trading after the ban on imports of steel scrap was lifted in Jan’21 coupled with strong domestic demand, SteelMint understands.
Japan largest exporter: Japan was the largest exporter of scrap to China with 0.22mn t in Jan-Jun’21, accounting for more than 70% of total imports. The former continued to feed a strong Chinese appetite for high-grade scrap. South Korea was the second-largest exporter with 0.07 mn t in H1 CY’21.
On 31 Dec’20, China’s Ministry of Industry and Information Technology jointly issued a notice to confirm the duty-free imports of recycled raw material for steelmaking with effect from 1 Jan’21. This move was taken to regulate the imports of recycled steel raw materials and promote the high-quality development of the country’s steel industry.
China’s strict standards and inspection processes are keeping import volumes limited. Buyers are targeting premium quality scrap. The imports have been mainly for Japanese HS that falls in China’s new import grade category HRS101.
However, China’s scrap imports faced a decline of 31% m-o-m in Jun’21 as compared to 0.11 mn t in May’21, SteelMint learnt from China’s customs data released recently. This was largely due to the bid-offer disparity for Japanese scrap cargoes.
Imported offers from Japan rise: Offers for Japanese HRS 101 grade ferrous scrap increased tonne (t)-to $570/t CFR China in end-Jun’21from $500/tonne (t) CFR China in early-Apr’21, according to SteelMint.
Outlook
Chinese ferrous scrap imports from Japan may slow down in the near-term considering the disparities in bids and offers. However, imports from South Korea may witness a boost in the near-term.
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