Scrap market activity remained sluggish in eastern China over the week with prices mainly holding steady and unlikely to gain any upward momentum in the short term as the outlook for the finished steel market remains pessimistic, market sources said Friday.
Platts assessed heavy scrap over 6 mm at Yuan 2,250/mt ($360/mt) including value-added tax delivered to Zhangjiagang city in eastern Jiangsu province, flat from last week.
Jiangsu province-based Shagang Group, China's largest scrap consumer, kept purchasing prices for all grades unchanged. The company saw deliveries a little higher week-on-week, giving it no reason to adjust prices, a company source told Platts.
A trader in eastern China said he held no hope of any scrap price recovery from the current level, already the lowest over the past few years, as Shagang had just cut its mid-June rebar prices, indicating a bearish market outlook for the steel market.
June, July and August is usually a non-peak season for the scrap market.
"In light of declining iron ore prices and the weak domestic steel market, I can't figure out any positive factors which would support scrap prices to increase," a second trader said.
Shagang trimmed its ex-works rebar prices for June 11-20 by Yuan 20/metric ton ($3/mt), reflecting a cautious attitude for June-August, which typically sees slower end-user demand.
A company source with Yonggang Group, another major scrap user in Zhangjiagang, said the company lowered its purchasing prices by Yuan 30/mt for the grade assessed by Platts.
"We are trying to increase the ratio of molten iron [for use in steelmaking] due to the low iron ore prices. As such, we cut the prices in order to purchase less scrap," he said.
