Chinese Scrap Import Slowed by Demurrage and Wage Upsurge

Japanese export of mix scrap and copper scrap maintains slow bound for China after Chinese New Year holidays. Chinese demand is weak and the offer price levels off especially for low-grade scrap due to the demurrage problem at Chinese quays and the wage upsurge trend in the coastal areas.

Several sources of Japanese scrap exporters said Chinese importers are cautious to newly purchase machine scrap including iron, copper or aluminium and their offer price is leveling off.

Chinese scrap import expanded in January when the market price seemed in the uptrend. According to the trade statistics by Ministry of Finance, Japanese copper scrap export exceeded 30,000 tonnes per month for the first time as January and about 90% of the export was for China.

Demurrages emerged at Chinese major quays in and after late February when large-quantity copper scrap arrived. The main factor for the demurrage seems to be labor shortage. Many labors left the coastal areas since Chinese government started to advance the economy growth in the inland areas, said Japanese large scrap exporter. As a result, scrap treatment is delayed at the quays and Chinese importers are inactive to contract new scrap.

Japanese scrap exporters are suffered from shipping shortage caused by demurrages in China. Bulk carrier’s freight jumped to around US$ 50,000-60,000 from US$ 35,000-40,000 before Chinese New Year holidays.

Additionally scrap treatment cost is currently increasing in the coastal areas, for example, the raise of minimum wages. Higher freight and scrap treatment charge impact Chinese offer price for Japanese metal scrap.