A slump in Chinese steel futures and a slump in spot prices kept buyers away from the import market on Friday, March 5, industry sources told Fast Market.
Overnight price declines in rebar, hot rolled coil and iron ore futures dampened buying interest, with HRS101-grade heavy waste (HS) imports being offered at $500-502 per tonne CFR China.
The seller quoted US $510 per tonne CFR China. Major market participants estimate prices at $505- $510 per tonne CFR China.
"Anything above CFR China's $510 a tonne offer is unworkable as domestic prices have fallen and Chinese mills are unlikely to accept it," said one trader in Singapore.
This is especially true after rebar prices in eastern China fell 80-90 yuan ($12.36-13.91) per tonne to 4,640-4,670 yuan per tonne on Friday. Fastmarkets learned that while major steel mills in Jiangsu kept their domestic scrap purchase prices at RMB3,350 to RMB3,390, some smaller mills cut their prices by RMB20 to RMB30 per tonne on Friday.
Chinese traders were previously trading at $510 to $515 a tonne CFR China and no longer represent the spot market, the sources said.
On Friday, Rapid Market assessed scrap, heavy-duty recycled steel material at $505- $510 a tonne CFR China, down $5 from the previous close of $510- $515 a tonne CFR.
Wednesday's delivery of 180,000 tonnes of Japanese scrap to major South Korean buyers, who have been spooked by oversupply, also unnerved buyers. This is especially true since the buyer purchased only 60,000 tons of high-grade Shindachi and HS scrap steel at the price of ¥48,500 (US $454) and ¥47,500 per ton FOB Japan respectively.
On Friday, another South Korean steelmaker bid FOB 43,000 yen per ton for Japanese H2 scrap. It is worth noting that the bid price is 500 yen per ton lower than the first mill bid price for the same grade.
"Sellers are looking to cash in and make a profit, which is why there are people in the market who think prices may peak in the short term," a trader source said.
"It feels like the market is about to peak, or maybe we are already there," a Japanese scrap supplier source said.
The annual meeting of China's top legislative and political advisory body, held in Beijing during a two-day break, was also marked by uncertainty over industrial regulations.
Market sources expect a series of announcements after the meeting, including tightening the money supply to reduce quantitative easing and prevent financial markets from overheating.