The impact of China's return as a scrap importer is expected to ripple throughout the global ferrous scrap and steel industry, and US sources are discussing what the ramifications will be domestically.
China made it's much-anticipated return to the global scrap market in early 2021 with a reclassification of the raw material for import and the first ferrous scrap import deal into China in nearly 20 months coming in the form of a nominal cargo sourced from Japan.
The US hasn't exported a significant cargo of shredded scrap to China since April 2018 when 25,000 mt and 23,100 mt left from the ports of Seattle and San Francisco, respectively.
In recent weeks, there were already reports of a bulk shredded scrap cargo purchased and bound for China from the US West Coast. Although heard by many, market chatter about the transaction remained unconfirmed. Even still, domestic scrap buyers are wary of the new market participant even though some cause for concern still remains for exporters looking to ship to the country.
"The bulk shred deal was [untrue]," said one supplier. "There's only [four major West Coast exporters] and none of those four would gamble and be the first to do that. Nobody wants to be the guinea pig."
"We're all talking about it; the consumers don't want to talk about another player in the mix," said a broker. "I think its going to make an impact, certainly on finished goods. If they're for real and they're going to start buying scrap I think it's going to be interesting. It's part of our mindset, we're definitely having those conversations and we're definitely seeing it as an impact item."
"I think it's going to be a very dynamic trading environment until things get settled on quality. I don' think guys are extremely comfortable with taking the quality risk into China right now," agreed a trader. He added that there are still other concerns about shipping to China as well. "You could be at risk of demurrage depending on what port your selling to, they may not have the exact equipment required, they may have congestion, etc. People are going to want to get comfortable and offset demurrage before they do that."
Source : https://www.spglobal.com/platts/en/market-insights/latest-news/metals