Posted on 20 Jun 2022
Only three days after the previous cut on its steel scrap procurement prices, Shagang Group (Shagang), China's leading electric-arc-furnace (EAF) steelmaker, has trimmed another Yuan 50/tonne ($7.5/t) off the HMS grades scrap prices for deliveries starting June 17, which is interpreted by Chinese market sources as the mill's attempt to further lower its production costs in response to weakening domestic steel prices.
With the latest price cut, the mill, headquartered in Zhangjianggang of East China's Jiangsu, is paying Yuan 3,770-3,780/t for domestically-produced HMS grade steel scrap including both the delivery and the VAT, according to the company's announcement.
Shagang's latest scrap price cut has triggered price declines in the spot scrap market in Zhangjiagang, with that of the 6-8mm common-grade carbon steel scrap, for example, down Yuan 30/t on day to Yuan 3,220/t excluding the 13% VAT by Friday morning, according to Mysteel's assessment.
"The persistently weakening steel prices have further squeezed profit margins or even added losses among most Chinese steelmakers including Shagang, so it is little surprise that they are easing the pressure by lowering production costs including steel scrap," a Shanghai-based market watcher commented.
For example, as of June 16, the national price of HRB400E 20mm dia rebar had lost Yuan 185/t on week to reach Yuan 4,653/t and including the 13% VAT. As a result, softening steel prices saw some 40 EAF mills sampled in another Mysteel survey still lose Yuan 143/t when producing and selling their rebar products as of Thursday.
Other than the softening in steel prices, "the recent cuts in steel scrap prices are also related to lukewarm finished steel demand," she added.
In tandem, Mysteel's tracking on spot sales of construction steel including rebar, wire rod and bar-in-coil among China's 237 trading houses showed that over June 10-16, the volume decreased by 7% or 10,444 tonnes/day on week to a relatively low level of 138,094 t/d.
Source:Mysteel Global
