The ferrous scrap market in eastern China remained quiet this week, keeping in step with the rebar market's trend. Demand from steelmakers has not fully recovered as the finished steel markets have remained sluggish.
Media reports that the Chinese government may reintroduce a value-added tax rebate for copper scrap processors this year rekindled some talk that a similar move could be in the works for ferrous scrap. But ferrous scrap traders doubt the government will introduce any rebate on scrap steel.
"Rumors are always there, but there has been no real activity for such a long time," a trader in Jiangsu said.
Platts assessed heavy scrap over 6 mm at Yuan 2,320/mt ($373/mt) delivered to Zhangjiagang city in Jiangsu province with value added tax, unchanged from last week.
Jiangsu's largest scrap consumer, Shagang Group, finished its annual order-placing meeting on Friday afternoon. Although there was no change in pricing, it said that it would bring out some policies to encourage traders to deliver cargoes. It already offers a Yuan 30/mt premium to traders which successfully deliver their contracted volumes.
The mill also said it plans to increase its scrap purchase volume by at least 500,000-600,000 mt from last year as it plans to launch two converters at the end of this year. In 2013 it bought 1.8-1.9 million mt, including imports.
Other leading steelmakers in eastern China also kept their purchase prices unchanged, citing the relatively stable raw material and finished steel products.
"Some steelmakers chose to increase their purchase prices this week amid the stable market, yet I believe they must cut prices in a couple of days," an official from a mill in Shandong province said Friday.
That mill cut its purchasing price for 6 mm heavy scrap to around Yuan 2,300/mt ($370/mt) delivered with VAT this week as it has not made any reduction during the past few weeks. Our demand is quite limited for the moment and inventory is currently over 3,000 mt, he added.
Scrap traders surveyed by Platts all kept their offers unchanged, and were in wait-and-see mode given the depressed market.
One trader in Jiangsu province noted that large steelmakers were trying to delay payment, pushing him to sell products to small mills nearby. The extremely low transaction prices meant the trader was already struggling to profit.
The company was delivering just 300-400 mt per day over Thursday-Friday, much lower than the 1,000-2,000 mt it was delivering when the market was stronger. Its offers for 6 mm heavy scrap of high quality were about Yuan 2,340/mt ($377/mt) delivered to Zhangjiagang city in Jiangsu province with value added tax.
