October 12, 2008

Scrap price surging in Chinese domestic market

Under the influence of the rising prices of raw materials and steel products, the prices of steel scrap continues hiking Analysts said that the situation will continue for prices of steel scrap in international market are also rising sharply. By May 6th, the prices of steel scrap continue hiking.

For example, the purchase price of Xingcheng steel is CNY 3,900 per tonne an increase of CNY 50 per tonne and price of heavy scrap is CNY 3,710 per tonne.

The rising price of steel scrap in international market is the direct cause for the increase of domestic price. Following the increase of USD 155 per tonne in April, US auto banding scrap reached to USD 561 per tonne on FOT basis. At present, the storage of scrap and steel products is low, so the expected price must be higher.

The price in May continued the situation in April, which made favorable environment for the prices of steel scrap. On the other hand, the continuing tense situation of scrap resources also gave support for the rising price. Domestic storage of scrap continued to be low but the demand of the market was strong, all of which pick up the present situation.

Analysts concluded that domestic market functions well, the resource supply is tense, and the international scrap price hike. All of these factors will put the later scrap market to function better and the price is expected to be higher.