Posted on 29 Oct 2021
Contrary to Japanese mills' busy raising their steel scrap procurement prices recently, Shagang Group (Shagang), China's leading electric-arc-furnace (EAF) steelmaker, has trimmed its scrap procurement price again on October 28, or the third time since October 22 by another Yuan 80/tonne ($12.5/t), mainly due to weakening domestic steel prices and intensifying concern on scrap consumption amid the ongoing wide-range curbs on steel production.
Shagang, headquartered in Zhangjiagang city in East China's Jiangsu province, has decreased its scrap buying prices by a total of Yuan 210/t over October 22-28, and it is now paying Yuan 3,650-3,710/t for domestically-sourced HMS 80:20 scrap including the delivery and the VAT, Mysteel Global understood.
"China's domestic steel prices have been slipping, and steel margins have been squeezed, and steel producers, with little to gain from steel sales, have decided to load some burden onto the raw material suppliers," a Shanghai-based steel analyst said.
As of October 27, China's national average price of HRB400E 20 mm dia rebar, a key spot market sentiment indicator for example, decreased Yuan 357/t on week to Yuan 5,435/t including the VAT, according to Mysteel's assessment.
Closely following Shagang's scrap price cut, price of the 6-8mm common-grade carbon steel scrap in Zhangjiagang had fallen Yuan 50/t on day to Yuan 3,240/t excluding the 13% VAT by Thursday morning.
Lower steel scrap prices, on the other hand, have panicked the Chinese steel scrap suppliers, and by October 27, steel scrap delivery to Shagang's Zhangjiagang steelworks, for example, persisted relatively high at 28,698 tonnes/day, according to Mysteel's tracking.
In the near term, demand for steel scrap and its price may soften further, mainly as China's steel production is expected to decrease further amid the series of curtailing measures including power rationing and upcoming winter restriction, Mysteel Global noted.
"Honestly, I don't understand the scrap market anymore, I had been holding onto my stocks on the anticipation of better demand after the National Day holiday, but now, I am eager to lighten my load, as I'm not sure whether or when the scrap price will bottom out," a Jiangsu-based scrap trader confessed.
So far in 2021, China's national composite steel scrap price has been persisting high on rather robust demand from the Chinese steel mills, as it has exceeded Yuan 3,000/t since January 11, and as of October 27, the price was at Yuan 3,721.6/t against Yuan 2,602.5/t a year ago.
Source:Mysteel Global
