Posted on 06 Nov 2020
Shagang Group (Shagang), China’s largest electric-arc-furnace (EAF) steelmaker, has raised its steel scrap procurement price again effective November 5, just one week after the previous rise and more substantially by Yuan 100/tonne ($14.7/t), suggesting the domestic steel mills’ good appetite for scrap while limited availability and on the support of the rebar price hitting the year’s high, Myteel Global noted.
The hike, the most substantial so far this year, doubled from the price rise by Yuan 50/t price on October 31, and is more than Shagang’s usual scrap price rises by Yuan 30-50/t most of the time, and with the adjustment, the company, located in East China’s Jiangsu province, is paying Yuan 2,890-2,950/t for HMS grade scrap including delivery and the 13% VAT, according to the release.
The latest scrap price adjustment is in the context that China’s domestic steel price have been on the rise since the start of November, and as of November 4, Mysteel’s average price for HRB400 20mm dia rebar hit its year’s high of Yuan 3,916/t and including the 13% VAT, up Yuan 17/t on day or Yuan 91/t on week.
Higher procurement prices, however, may fail to stop steel scrap delivery from further declines, a Jiangsu market watcher warned. “Together with Shagang’s previous price rise, these may not be able to ease the supply tightness much in the short term especially when the supply reduction is more seasonal,” he added.
Winter usually makes it hard for scrap collection, separation and processing in China, Mysteel Global understands.
As of November 4, scrap delivery to Shagang’ Zhangjiagang steelworks had stayed on the downtrend, having slid by another 28.5% on day or 30% from last Friday to 11,802 tonne/day, a market watcher close to the mill shared.
Scrap suppliers have indeed shown limited enthusiasm of selling despite recent price rises as the demand may not ease any soon now that the steel prices have been on the rise, and Chinese steel producers will consume more scrap in their high steel production, a scrap supplier in East China’s Zhejiang province confirmed.
“Steel mills’ demand for steel scrap remains strong, so we are still unwilling to increase sales by any larger degree. Instead, we are planning to hold onto some of tonnage we have sourced from the local collectors for the winter season,” he said.
In immediate response to Shagang’s scrap price rise, China’s spot transaction price of the 6-8mm common-grade carbon steel scrap in Zhangjiagang rose Yuan 50/t on day to Yuan 2,540/t excluding the 13% VAT as of November 5, according to Mysteel’s survey.
Written by Lindsey Liu, liulingxian@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
Source:Mysteel Global
