China’s Shagang Steel Cuts Scrap Purchase Price by USD 7 on Falling Steel Prices

Following steep decline in finish steel prices, steelmaker observed the first price cut for scrap purchase since 31st Aug’18.

The largest ferrous scrap consumer in east China – Shagang Jiangsu Steel group has slashed its domestic scrap purchase prices by Chinese Yuan 50/MT (USD 7) effective from 13th Nov. Amid falling finish steel prices and rising supply in the spot market the steel mill could have reduced scrap purchase prices.

As per reports, Shagang is paying RMB 2,730/MT (USD 393) inclusive of 16% VAT for HMS (6-10 mm thickness) delivered to headquarter works situated in Zhangjiagang province in China, down RMB 50/MT as against last report of RMB 2,780/MT on 27th Oct’18.

In line with this, the prices for other grades of scrap also have come down by RMB 50/MT in the latest revision. Shagang is paying RMB 2830/MT (USD 407) for HMS 1 (thickness not less than 20 mm) while around RMB 2500/MT and RMB 2630/MT for melting scrap 2-4 mm & 4-6 mm thickness respectively. New prices stand at RMB 2850/MT for charging scrap 1 and RMB 2780/MT for HMS 2 (6-10 mm) inclusive of 16% VAT.

Notably, this was the first time in last two and half months’ period the mill had lowered its scrap buying price.

Shagang Steel is one of the leading steelmakers in China and with an annual production capacity of 31.9 MnT iron, 39.2 MnT steel and 37.2 MnT rolled products.

Domestic scrap purchase prices turn down in other major provinces – Many of the leading scrap consuming steelmakers like Maanshan, Zenith, Nanjing and Xingcheng steel have also reduced their purchase prices by RMB 30-70/MT in eastern China following Shagang’s lead yesterday.

Province-wise domestic scrap reference prices as on 14th Nov’18 –

Source: SteelMint Research; Exchange Rate: 1 USD = 6.95 RMB

Shagang Steel cuts wire rod prices for mid-Nov shipments – The mill has reduced wire rod prices on weak demand for mid-November shipments by RMB 80/MT however has rolled over the prices those for rebar.

Shagang is selling its HPB300 wire rod at RMB 4,810/MT (USD 691) over the period 11-20 Nov, down RMB 80/MT (USD 12) from its last set of prices for early November. It is selling its HRB 400 16-25 mm rebar at RMB 4,780/MT (USD 688) over the period 11th-20th November, unchanged from the early November shipments. Both prices are on an ex-works basis, including VAT.

Recent Rebar prices in eastern China were at RMB 4,420-4,450/MT, down RMB 250/MT as against on 31st Oct’18.