China’s Shagang group – has lowered its domestic scrap purchase price by RMB 50/t ($7) for all grades, effective from today (24th Sep’20). This is 3rd price cut made by the company so far in Sept’20.
The purchase price of HMS (6-10 mm) thickness has now come down to RMB 2,690/t ($394), inclusive of 13% VAT delivering to headquarters works at Zhangjiagang North of Shanghai in China. Especially, prices are at similar levels from previous year in the same month on 20th Sep’19. While other grades including HMS (10-20 mm) thickness stands at RMB 2,720/t ($398) and HMS (not less than or equal to 20 mm) thickness stands at RMB 2,750/t ($403).
Shagang is eastern China’s largest EAF steelmaker. It produced 41.1 mnt crude steel in CY19.
Factors resulting in scrap price cut –
- Easing scrap supplies – Mills have lowered scrap procurement prices amid increased plant arrivals and steel sales lately.
- Decline in steel prices following drop in futures – Prices of semi-finished steel fell sharply, due to which mills have adjusted their production cost by cutting down scrap purchase price. During 15-22 Sep’20, the SHFE rebar futures Jan’21 contract fell by RMB 55 ($8), from RMB 3,592/t to RMB 3,537/t.
- Fall in iron ore prices – Spot iron price in China fell on bearish market sentiments following continuous decline in futures. Fe 62% fines index has come down by $8 w-o-w and stood at $114/t CFR China yesterday.
It is expected that Chinese domestic scrap prices may soften further in the near short term, considering reduction in steel output by EAF mills.
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