China: Shagang Steel Further Cuts Scrap Purchase Price by USD 6/MT

One of the largest ferrous scrap consumers in east China, Shagang Jiangsu Steel group has cut its domestic scrap purchase price by Chinese Yuan (RMB) 40/MT (USD 6). After witnessing price drop of total RMB 60/MT last week, the company has slashed its prices again amid weakening global scrap prices and sufficient inventories available in hand.

As per latest price updates received, Shagang is now paying RMB 2,300/MT (USD 359) inclusive of 17% VAT for HMS (6-10 mm in thickness) delivered to its headquarter works situated in Zhangjiagang province in China.

In line with this, Shagang also slashed purchase prices for other grades of scrap by RMB 40/MT in the latest price revision. Shagang is now paying RMB 2400/MT (USD 374) for prime scrap (6-10 mm) and RMB 2380/MT (USD 371) for HMS 1 (thickness not less than 20 mm). While new prices stood at RMB 2200/MT (USD 343) and RMB 2070/MT (USD 323) for melting scrap with specification 4-6 mm and 2-4 mm thickness respectively inclusive of 17% VAT.

Amid lack of strong upward momentum in demand for finish steel in the domestic market China, Shagang witnessed three successive price cuts through which prices have moved down by RMB 100/MT (USD 16) as against temporary peak achieved at RMB 2400/MT in early May. Prices remained stable for almost three weeks at peak then.

Few other steelmakers in eastern China like Maanshan Steel, Nanjing Steel, Xicheng Steel and Pingxiang Steel also have lowered the scrap purchase prices by RMB 30-50/MT recently following the ample supply of scrap in the market.

Shagang Steel is one of the leading steelmakers in China and has an annual production capacity of 31.9 MnT iron, 39.2 MnT steel and 37.2 MnT rolled products. In 2017 Shagang Steel’s domestic ferrous scrap purchases recorded at 5.72 MnT as against 2.43 MnT in 2016, while company forecasts its annual scrap purchases likely to exceed 7 MnT in 2018.

Province-wise domestic HMS scrap reference prices as on 29th May’18 –

Source: SteelMint Research; Exchange Rate: 1 USD = 6.41 RMB

Shagang rolled over finish long prices for late May shipment – Shagang rolled over the prices for its long steel products for shipment in late May. HRB400 16-25mm rebar prices stood at RMB 4,140/MT over the 21st-31st May period, unchanged from its last set of prices. Shagang also kept prices unchanged for wire rod from mid-May, taking HPB300 6.5 mm wire rod prices to RMB 4,350/MT, both the prices are on the ex-works basis including 17% VAT.

Domestic finish steel prices flat in China amid stable trading – China witnessed stable trading this week, however, demand has not picked up as expected and prices for finish steel remained weak in the domestic market. Domestic Rebar prices in eastern China stood at RMB 3,830-3,880/MT (down by RMB 120/MT W-o-W).