Posted on 27 Oct 2021
On October 26, Shagang Group (Shagang), China's leading electric-arc-furnace (EAF) steelmakers, has trimmed its steel scrap procurement price by another Yuan 50/tonne ($7.8/t) with immediate effect, or just four days after its previous price cut, which is interpreted by the Chinese market sources as the mill's attempt to further lower its production costs in line with domestic steel price softening.
With the latest price cut, the mill, headquartered in Zhangjianggang of East China's Jiangsu, is paying Yuan 3,730 - 3,790/t for domestically-produced HMS grade steel scrap including both the delivery and the VAT, according to the company's announcement.
Shagang's scrap price cut 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 3,290/t excluding the 13% VAT, according to Mysteel's assessment, and following Shangang, 25 other steelmakers nationwide have also lowered their scrap buying prices by Yuan 20-50/t, Mysteel noted.
"Recent domestic steel price declines have squeezed steel profit margins of all Chinese steelmakers including Shagang, so it is of no surprise that they are passing on the pain through the value chain to raw materials including steel scrap," a Shanghai-based market watcher commented.
As of October 25, China's national average price of HRB400E 20mm dia rebar, a bellwether of the domestic spot steel market sentiment, slumped Yuan 289/t on week to Yuan 5,535/t and including the 13% VAT, or a new low since September 13, according to Mysteel's database.
Recent frequent scrap price cuts have also led to high delivery from the domestic scrap traders to the steel mills on their concern for further price declines, and as of October 25, steel scrap delivery to Shagang's Zhangjiagang steelworks, thus, persisted at a relatively high level of 27,898 tonnes/day, according to Mysteel's tracking.
Source:Mysteel Global
