Posted on 11 Aug 2021
Only three days after the previous cut on its steel scrap procurement price, Shagang Group (Shagang), China’s leading electric-arc-furnace (EAF) steelmaker, trimmed another Yuan 50/tonne ($7.7/t) off the very price for deliveries starting August 10, which is to timely respond to the recent domestic steel price declines and less scrap consumption among the Chinese mills, Mysteel Global noted.
With the latest cut, Shagang, headquartered in East China’s Jiangsu province, is paying Yuan 3,750 - 3,810/t including the delivery and the 13% VAT for domestically-produced HMS grade scrap, in line with the downtrend spotted in the domestic steel prices.
China’s national average price of HRB400E 20mm dia rebar, for example, down Yuan 67/t on week to Yuan 5,322/t including the 13% VAT as of August 10, according to Mysteel’s assessment, which was mainly due to Beijing’s July 30 call for stability in supplies and prices of bulk commodities, as reported.
Other than the overall shakiness in China’s domestic steel market sentiment, many domestic steel mills including Shagang have been reining in their steel output on Beijing’s reiteration on lower steel output for 2021 than 2020, and the domestic consumption of steelmaking raw materials including iron ore and scrap have been declining, Mysteel Global noted.
Daily steel scrap consumption among China’s 15 steel mills including both blast-furnace and EAF mills did slide for the second week by 2.5% on week to 5,766 tonnes/day on average as of August 9, Mysteel’s other survey showed.
Besides, Shagang’s recent frequent cuts on scrap procurement prices prices have also had to do with the substantial softening in the imported iron ore prices, as scrap and iron ore prices tend to be closely correlated, according to a Shanghai-based market watcher familiar with the company’s pricing policy.
As of August 9, Mysteel SEADEX 62% Australian Fines decreased by $18.45/dmt on week to $163.45/dmt CFR Qingdao, or a 4.5-month low since March 26.
Shagang’s latest scrap price cutimmediately resulted in declines in the spot scrap prices in Zhangjiagang on August 10, with that of the 6-8mm common-grade carbon steel scrap, for example, down Yuan 20/t on day to Yuan 3,260/t excluding the 13% VAT, according to Mysteel’s assessment, as traders are with the growing concern on further price declines.
To minimize the risks, many scrap traders in China have also sped up their deliveries to their steelmaker customers, and as of August 10, steel scrap deliveries to Shagang’s Zhangjiagang steelworks averaged 22,099 t/d, or having hovered at the relatively high level of over 200,000 t/d since the start of August, Myseel’s survey shows.
Source:Mysteel Global
