The iron ore complex surged on Thursday, bringing prices to new highs as demand for iron ore remains high in the Middle Kingdom:
Spot prices exceeding $170USD per ton while coking coal and rebar advanced nearly 2%.
The lifting of a two year ban on imported scrap steel into China last week are considered “symbolic only” according to SCMP:
The ban on scrap steel for steel production was lifted from the start of January after China had prohibited its import to prevent the global dumping of low-grade scrap “waste” since late-2018.
Last week, new standards were also formalised by authorities to classify scrap as a “recycled steel raw material”, while also reducing the import tariff to zero. This adjustment coincided with a total ban on general imported solid “waste” that went into effect on Friday.But two deals by Baowu Steel Group and Zhejiang Judong struck just after January 1 appear to be part of an early trial and are not indicative of a surge in scrap imports, given the excessively high prices struck, analysts said.
“The market thinks these deals are mostly symbolic, as current economics don’t add up. Chinese domestic scrap prices are nearly US$60 a tonne cheaper than Japanese scrap prices after accounting for freight rates. So, we don’t think there will be any surge in imports in the short term,” said Keith Tan, S&P Global Platts’ senior steel and raw materials analyst.
Chinese mills can procure similar ferrous scrap grades locally today at much more competitive rates compared with the cargoes recently purchased from Japan“While some cargoes were booked on New Year’s Day from Japan to China, we believe this was little more than a ‘public relations trade’ rather than out of any economic benefit,” he said. “Looking at the economics, Chinese mills can procure similar ferrous scrap grades locally today at much more competitive rates compared with the cargoes recently purchased from Japan.”
The move to permit scrap steel had also been long in the making, as Chinese authorities pivoted towards waste management and recycling, analysts added.
Despite China’s stinging tensions with its biggest iron-ore supplier, Australia, analysts also said that the new rules were not targeted at Australian imports, as the tilt towards steel scrap had been earmarked as a wholesale change as part of China’s 14th five-year plan.Analysts added that, due to the higher prices of imported scrap and the small size of the global scrap market, it is unlikely steel mills will be motivated to replace large amounts of imported iron ore with scrap steel in the short term. The high price of scrap steel and its low availability are not compatible with volume-driven steel producers.
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Yeah I don’t think scrap steel from Japan is indicative of the broader trade. China and Japan are currently engaged in all kinds of displays of alliance shifts.
Apparently China has been working on controlling the Asian scrap steel supply chain for a long time – and this trade was a “show” piece of that.
I am sure that it was a typical China play, create demand for something, people invest in that supply chain and establish a market / business, China suddenly stops that demand, companies involved go broke, China buys them cheap and restarts demand with all the moving parts in play with zero setup costs and ownership of the supply chain.
Middle Kingdom? Please. A more accurate translation would be “Central Kingdom”.
The best translation is ‘Middle Kingdom’. The 中 in 中国 is not ‘center of the world’ but ‘between Heaven and Earth’.
That is one interpretation.
https://www.encyclopedia.com/history/asia-and-africa/chinese-and-taiwanese-history/middle-kingdom
The second character means country and is the same character used for almost every nation Guo. Fa Guo, Mei Guo Ying Guo etc. It is a picture of a field with paddocks being tended.
The first character is literally an arrow hitting a target – which translates as middle or center (bulls eye).
Zhong Guo literally translates as “middle country”.
Studied Chinese through the 1980-1990’s to university level and traveled their prior to the end of the cold war.
and AFAIK (I’m no expert in this field, just the use of words to get a point across), its how the West describes how China sees/saw itself, as the premier kingdom between heaven and the rest of the earth, the double analogy of being the “center” of civilisation.