Posted on 05 Jul 2022
The latest scrap price cut of Yuan 50/tonne ($7.5/t) on July 4 by Shagang Group (Shagang), China's leading electric-arc-furnace (EAF) steelmaker, or the sixth since June 16, was interpreted by domestic market sources as the timely reflection of weakening steel demand and growing concern on scrap consumption amid mills' persistently thin margins or even losses.
Shagang, headquartered in Zhangjiagang in East China's Jiangsu province, had decreased its scrap buying prices by a total of Yuan 470/t over June 16-July 4, and is now paying Yuan 3,3550-3,410/t for domestically-sourced HMS 80:20 scrap including the delivery and the VAT, Mysteel Global learned.
"Despite the slight recovery in steel demand recently, Chinese steel market is still under pressure as high summer temperatures and frequent heavy rains in many regions across China may continue to affect demand from end-users," a Shanghai-based market watcher commented.
"Thus, some steelmakers including both blast furnace (BF) and EAF producers continued to conduct maintenance on their steelmaking facilities or slowed down their production pace given the losses they had suffered, which had intensified the concern on less scrap consumption in the near term," she added.
For example, as of June 30, the capacity utilization rate among China's 85 independent EAF makers nationwide under Mysteel's survey had decreased for the eighth week to a five-month low of 35.59%. And the daily scrap usage among 61 Chinese BF and EAF steelmakers had also decreased by 8.6% on week to 2,413.5 tonnes/day, or a new low since March 2020.
Meanwhile, Shagang had slashed its long prices for sales over July 1-10 by Yuan 250/t, as reported. The lower finished steel prices had also forced Shagang to further cut its raw material prices, Mysteel Global learned.
Shagang's latest scrap price cut had triggered an immediate spot scrap price drop in Zhangjiagang on July 4 morning, with that of the 6-8mm common-grade carbon steel scrap down Yuan 20/t from last Friday to Yuan 2,870/t excluding the 13% VAT, according to Mysteel's assessment.
Source:Mysteel Global
