Posted on 17 Dec 2021
Shagang Group (Shagang), China's leading electric-arc-furnace (EAF) steel producer, has raised its steel scrap procurement price by another Yuan 100/tonne ($15.7/t) effective December 16, or the second time this month, indicating the firm demand from domestic steelmakers against the limited supply in winter due to serial production restrictions.
With the latest adjustment, Shagang, headquartered in East China's Jiangsu province, is paying Yuan 3,440-3,500/t for HMS grade scrap including delivery and the 13% VAT.
Shagang's decision to lift its scrap buying prices prompted the spot transaction price of 6-8mm common-grade carbon steel scrap in Zhangjiagang in Jiangsu to rise by Yuan 60/t on day, reaching Yuan 3,330/t excluding the 13% VAT as of December 16, according to Mysteel's assessment.
Meanwhile, Shagang's latest scrap price increment has also triggered a round of similar price increases among EAF makers nationwide, with another 24 steel mills agreeing to add Yuan 20-100/t onto their scrap procurement prices from December 16.
"After Shagang's last price rise on Saturday (December 11), scrap deliveries to its plants have been picking up though the tonnage being delivered could just barely meet its daily consumption," a Shanghai-based market watcher said, adding that the overall scrap delivery to mills still hovers at a low level due to slower collection, separation and logistics of scrap in winter months.
As of December 15, scrap deliveries to Shagang's Zhangjiagang steelworks averaged 14,099 tonnes/day, while in the peak season, the volume usually hovers at around 20,000 t/d, Mysteel Global understands.
Moreover, with the coming Chinese New Year holiday over January 31-February 6, some mills opted to raise their scrap buying prices to attract more deliveries both for their near-term production and replenishment during the holiday break, according to the market watcher in Shanghai.
"We decided to slow down our selling though the scrap prices have been rising, so that we could have sufficient stocks when more mills start to build up their scrap stocks prior to the new year holiday," a scrap trader in East China's Zhejiang province said.
Source:Mysteel Global
