China’s Shagang Steel hikes scrap purchase price on supportive steel prices

China’s largest EAF steelmaker- Shagang Steel has announced its scrap purchase price revision after a gap of one month. The company has increased scrap purchase prices by RMB 30/t ($5) for all grades. The price for HMS (6-10 mm) stands at RMB 3,420/t ($522), inclusive of 13% VAT, delivered to headquarters works at Zhangjiagang North of Shanghai in China.

Prices for other grades such as HMS (10-20 mm) thickness stands at RMB 3,450/t ($526) and HMS (not less than or equal to 20 mm) thickness are at RMB 3,480/t ($531). The prices are hovering at a three-year high, as per SteelMint data. Price uptick in global scrap market along with a surge in Chinese domestic steel prices has led to price hike.

Factors supporting price hike –

• Hike in global scrap prices – Global scrap prices have been recovering since last week. Japanese H2 is now being offered at $450-455/t CFR Vietnam levels, up by $15-20/t w-o-w. However, Japan’s monthly Kanto scrap export tender is scheduled on 9th Apr’21 and market participants are waiting for the results to get a clear outlook on Japanese scrap export prices.
  Ferrous scrap export volumes from Japan to China doubled at 0.01 mn t in Feb’21 as compared to the previous month and jumped up fourfold from Feb’20, since China has lifted restriction on ferrous scrap imports from Jan’21.
• Higher iron ore prices – Spot iron ore price (Fe 62% fines) increased further by $2.05/t d-o-d to $172.90/t CFR China despite the weakness in iron ore demand from Tangshan mills due to strict emission controls. Mills are cautious in procurements with low interest in concluding deals. Meanwhile, Chinese iron ore DCE futures contract yesterday closed higher by RMB 22.5/t d-o-d.
• China’s Shagang raised long steel price by up to RMB 200/t ($31) for early-Apr – The company had raised its construction steel prices for early-Apr sales, effective from 1st Apr’21 till 10 Apr’21. The price hike can be attributed to rising semi-finished steel prices and improved demand for construction steel. Rebar (16-25mm) offer stands at RMB 5,050/t ex-mill.

  

• Surge in Chinese billet prices – As of 07 Apr’21, the Tangshan Q235 150mm square billet price in North China soared to a new high of RMB 5,040/t EXW including the VAT, on the market concern regarding restrictions on production imposed on Tangshan steel operations until the year-end. Prices have hit a twelve and a half year high.

Shagang Steel registered higher profits in CY’20 – Shagang Group has released its financial results of CY’20. It has achieved an operating revenue of RMB 266.8 billion, with tax and profits standing at RMB 19.6 billion. The company’s net profit moved up by 22.8% y-o-y in CY’20.