Chinese Scrap Export Slows Down but Won't Stop - Reports

Ferrous scrap exports from China in the news highlights since past few weeks. With Chinese government laying stricter regulations on electric arc furnace steelmakers, indicates the possibility of increase in scrap exports from China in the coming time. The Chinese government's directive to eliminate scrap-fed induction melting furnaces in the country by June 30, led to a huge turnaround.

Much hyped ferrous scrap exports from China has slowed down in last few days but market experts feel it will not stop.

"China's ferrous scrap exporting was triggered by two orders issued by Chinese government. One is the order to close all the small-sized induction furnaces and electronic furnaces by the end of June which consume scrap as raw material, and the other is issued for the mixed scrap yards to store the scraps indoors till 15 Jun'17."

So, mixed scrap dealers had difficulty in store indoors the scraps which have been kept in open-air yards. But, exporting negotiations seem to have ceased along with the coming of the deadline next week," said Mr Tanamachi from Japan, who is closely watching Chinese exports.

Traders interpretation of 40% export duty on Chinese scrap

Originally this ferrous scrap export from China was virtually unrecognized due to the high tariff of 40% set by the Chinese government and since the domestic market in China fell more than necessary it put a 40% tariff it also began with price becoming a match.

Suppliers calculated the base prices at their discretion by adding the FOB cost to the domestic price, on which the 40% of export duty was thought to be imposed. But, a shipper who shipped H3/L1 to Tokyo Steel was pointed out by the government that it should put 40% on it's selling price, not on the FOB price.

However, exports of Chinese steel scrap which have turned dull in last few days is likely to resume again as scrap availability will increase in the coming days. However the government comes out with clear guidelines on scrap exports. I think that the Chinese government can not regulate the export of iron scraps in the current domestic environment, said Mr Tanamachi.

South East Asian scrap buyers see Japanese Scrap

As Chinese ferrous scrap export offers have turned to wait & watch mode for the time being, South East Asian buyers have shifted their buying interest to Japanese scrap. As per sources, in the recently conducted Kanto Tetsugen tender the average bid price in Jun'17 tender was at USD 232 (Japanese Yen 25,525) FAS higher by USD 7 (Japanese Yen 790) against the previous month's tender conducted in May'17.

Chinese ferrous scrap exports surge sharply in Jan-Apr'17 - As per reports, Chinese ferrous scrap exports in first four months of CY17 stood at 16,081 MT against 272 MT in the same time frame previous year. Thus, the scrap exports have multiplied about 60 times in this year.