Despite buying a little more than 500,000 mt of scrap in the first three months of this year, China is dominating the steel scrap market, according to the latest Bureau of International Recycling World Mirror on ferrous metals.
China imported 545,000 mt of scrap in the January-March period, with its overall scrap usage in steelmaking falling over 9% to 21 million mt.
However, it continued to pump out massive amounts of its structural surplus -- over the first five months of the year exports reached 43.5 million mt, an all-time peak, and much higher than many analysts had anticipated.
And the price at which it is offering finished and semi-finished products keeps falling, aided by lower raw material costs and with sluggish domestic demand.
At the end of May, Chinese billet was offered into Turkey -- the world's largest market for seaborne scrap -- at $365/mt CFR.
By mid June this fell to $335/mt, and offers are now reported to be around the $320/mt CFR level, according to Tom Bird, board member of the BIR ferrous division.
Clearly this had a marked impact on the price of scrap, as Turkey reduced its buying.
"China continues to have a huge impact on the scrap market, not because it is buying scrap but because it is exporting huge quantities of billet, rebar and other steel products," George Adams, BIR ad hoc board member, said.
"These exports are affecting all markets around the world and no country is immune," he added.
With iron ore trading at current low levels, "there is no reason to believe China will raise the price of steel it is shipping or that it will discontinue its high volume of exports," Adams continued.
"The overhang of Chinese steel in our markets has inevitably become the new normal," William Schmiedel, president of the BIR ferrous division, said.
Bird said the EU scrap market has softened markedly since June, with Ramadan crimping export activity and dampening expectations.
"Sentiment was a little more downbeat and this influenced the EU market in its decision to push through a reduction," he said.
In Italy and Spain, shred was trading below Eur220/mt. With many mills likely to shut for maintenance this month, buying will remain subdued, he added.
"With the holiday period approaching across EU regions, it is likely that merchants will not actively chase material and will only commit to limited tonnages at these reduced levels.
"Margins and volumes will be under renewed pressure as the ongoing market reduction takes effect," he concluded.
Turkish imports fell 5.7% in the first quarter to 4.14 million mt, BIR said.
But it remained the world's largest importer, with India coming in second. Indian imports surged 45.8% over Q1, to 1.45 million mt.
South Korea chopped its imports by almost 48%, to 1.2 million mt.
The EU remained the largest exporter, although overseas shipments fell over 10% to 3.53 million mt.
US overseas shipments dipped by a more modest 5% to 3.3 million mt.
