China: Ferrous Scrap Exports Fall 99% in Q1 2019

According to customs data maintained with SteelMint, China exported just 1,740 MT ferrous scrap recording a huge drop of 99% on year against 162,690 MT exports registered in Q1'CY18. However, exports jumped up by 645 MT i.e. 59% Q-o-Q against 1,095 MT ferrous scrap recorded in Q4'CY18.

Notably, export volume in Mar’19 rose 11% M-o-M to 158 MT against 142 MT in Feb’19 however it was lower 99.5% Y-o-Y against 34,350 MT in Mar’18, the data showed.

After cracking down of smuggling case, the Chinese government has stopped releasing country wise imports and exports volume and increased inspection at ports which have led to a sharp fall in scrap exports. Also, Beijing’s imposition of the hefty 40% export tax is still seen as preventing China’s ferrous scrap exports from seeing any notable rises longer term.

Participants anticipate that Chinese scrap exports may not see any significant recovery even in the coming months. Traditionally, March-April is considered as the peak season for steel sales in China but this year steel market in March didn’t produce as substantial growth as in the previous year so far as profit margins are concerned and scrap exports remained less attractive to traders.

Chinese scrap imports fell 85% Y-o-Y in Q1 2019 - Chinese scrap imports in Q1’2019 hit 3 years low since the data is maintained with SteelMint. The country imported 70,000 MT ferrous scrap during the first quarter of 2019, down 85% on year against 456,549 MT in Q1'2018. While imports plunged 75% Q-o-Q against 270,000 MT in Q4'2018.

The huge fall on yearly basis indicated the firm determination of the central government in Beijing to strictly ban the import of foreign waste material from the start of this year. Stricter regulation and supportive domestic scrap availability likely to keep imports lower side in the near future in China.

The government aims to impose the restriction on 8 kinds of solid waste effective from 1st Jul’19 including few grades of steel scrap, copper and aluminum scrap apart from 16 kind other solid waste import categories which have already been restricted since 31st Dec’18.

In Mar’19, Chinese steel scrap import volume multiplied three folds on a monthly basis to 30,000 MT against 10,000 MT in Feb’19 however it was lower 82.2% Y-o-Y against 169,246 MT ferrous scrap in Mar’18, the data showed.

Major exporters of ferrous scrap like Japan, United States and Australia have been observing sharp decline in scrap exports to China after Q1'2019 by shifting their supply to other prominent importers. Chinese steelmakers continued using domestic scrap amid stabilized prices and stricter government policies.

For major eastern provinces in China, the average domestic scrap purchase price of HMS scrap (6mm-10mm) recorded at RMB 2,628/MT (USD 390) in Q1'2019 as against RMB 2,600/MT in Q4'2018. The monthly average price for Mar’19 stood at RMB 2,622/MT (USD 389) as against RMB 2,644/MT in Feb’19.