China: Ferrous scrap imports fall for third month in a row, down 55% in Oct'21

China's recycled steel raw materials, or ferrous scrap import volumes, in Oct'21 dropped for the third consecutive month. The world's leading steel producer imported 9,152 tonnes (t) of ferrous scrap in Oct'21 as compared to 20,519 t in the previous month, a drop of 55% m-o-m, as per customs data maintained with SteelMint.

The overall weak demand from end-users in winter, bid-offer disparities and preference for domestic scrap have collectively lowered import bookings.

Reasons behind fall in scrap imports

• Production curbs: Demand for steel scrap faded after the steel production cuts and power disputes, limiting blast furnace operations which impacted the Chinese market harshly. Scrap imports into China fell as lack of buying interest continued, latest data by SteelMint showed. China's crude steel output fell for the fifth consecutive month in Oct'21. Steel production was recorded at 71.58 mn t, down by 3% on a monthly and 23% on an annual basis.
  
  
• Imports from Japan fall on high offers: Chinese mills imported 3,930 t of scrap from Japan in Oct'21, a sharp drop of 67% as against 11,750 t in the preceding month, marking its lowest volume after February imports. Offers for Japanese H2-grade ferrous scrap rose by JPY 750/t ($6/t) FOB to JPY 46,250/t ($402/t) FOB in Sept'21 from JPY 45,500/t ($396/t) FOB in Aug'21, according to SteelMint data.
  
  

Chinese mills held back from concluding deals for Japanese ferrous scrap due to bid-offer disparities and instead were actively involved in trading billets at workable prices from Vietnam and Indonesia.

• Import from South Korea slightly up: South Korean mills exported a total of 2,413 t of ferrous scrap to China in Oct'21, making a rebound of 11% as compared to 2,170 t in the previous month. Following this was Hong-Kong which supplied 464 t to China in October. However, on a y-o-y basis, China saw a sharp growth of almost 800% in scrap imports compared with 1,056 t in Oct'20.
  
  

Outlook
For the remaining two months of CY'21, market sources expect China's scrap trading activity to remain consistently subdued, as steelmakers will continue to be under pressure amidst production and power cuts and the approaching winter. Hence, they are more likely to procure scrap locally instead of importing the same.