Posted on 18 May 2021
ABSTRACT
For the first time this month, China’s largest electric-arc-furnace steel mill, Shagang Group (Shagang), has cut its steel scrap procurement prices, clipping these by Yuan 50/tonne ($7.8/t) for all deliveries effective from May 16. Market sources said the mill’s decision to pare its buying prices reflects the recent softening of domestic steel prices and the improvement in the volumes of scrap being delivered to mills.
The price cut is its first after Shagang had hiked its buying prices by a total of Yuan 650/t after entering May, Mysteel Global notes. With the latest price adjustment, the steelmaker is now paying Yuan 4,140-4,200/t for domestically-sourced HMS 80:20 scrap including the delivery and the 13% VAT.
“After the previous surge in prices, it’s not surprising the market should take a breather,” a Shanghai-based market watcher commented. “Also, the decline is a reaction to the declines in domestic steel prices,” she added.
As of May 14, China’s national average price of HRB400E 20mm dia rebar, for example, had edged down for two successive working days by a total of Yuan 248/t to settle at Yuan 6,100/t and including the VAT, Mysteel’s data shows.
Another factor supporting Shagang’s decision to cut on its scrap price is the uptick in volumes of scrap being delivered to its steelworks recently. According to Mysteel’s latest survey, as of May 16 the average of scrap being delivered to its Zhangjiagang steelworks in East China’s Jiangsu province had grown by 14.8% on day to 33,492 tonnes that day – which was also higher by 94.7% from the daily average during the prior week.
Shagang’s price cut was immediately reflected in the spot steel scrap market in Zhangjiagang where the price of 6-8mm common-grade carbon steel scrap fell by Yuan 150/t from last Friday to reach Yuan 3,490/t excluding the 13% VAT as of May 17.
However, Shagang’s latest scrap price cut has not triggered too much panic among the scrap traders, as they remain optimistic about the domestic steelmakers’ near-term demand for feeds. “The downward adjustment in scrap prices has not dampened the steel mills’ sentiment too much,” a scrap trader in East China’s Zhejiang province explained. “The healthy profit margins they continue to enjoy will encourage them to keep producing.” Mysteel Global was told.
Source:Mysteel Global
