China: Shagang lifts scrap purchase prices by $12/t after 1-month gap

China’s largest electric-arc furnace (EAF) steel maker, the Jiangsu Shagang Group, announced its first hike for scrap purchases for Jul’21. The company today announced a scrap procurement price hike by RMB 80/tonne (t) ($12/t) across all grades. The reasons behind the hike in the scrap bids include securing more scrap deliveries and hike in semi-finished and finished steel prices.

After the revision, current prices for HMS (6-10 mm) stand at RMB 3,850/t ($594/t), inclusive of 13% VAT, delivered to headquarters.

In the meantime, prices for other grades, like HMS 10-20 mm, are at RMB 3,880/t ($598/t) and HMS not less than or equal to 20 mm thickness, at RMB 3,910/t ($603/t). The price revisions have been made after a gap of one month. In mid-June the company had raised offers by RMB 80/t.

Factors supporting scrap price hike

• Chinese domestic billet prices rise: Domestic billet prices in China rose by RMB 40/t ($6/t) d-o-d on 19 Jul’21. Prices of the commonly traded Q235 billet (150 mm) were reported at RMB 5,180/t ($799/t) in Tangshan, including 13% VAT. According to data maintained with SteelMint, Chinese rebar futures for Oct contracts closed at RMB 5,568/t ($859/t), up by RMB 9/t ($1.5) against the closing on 16 Jul.

• Supportive steel prices: Chinese steelmaker Shagang Steel increased rebar prices by RMB 200/t ($31/t), while keeping its coiled rebar and wire rod prices unchanged for mid-Jul’21 sales, as per the company’s list prices announced on 11 Jul. Rebar (16-25mm) prices are at RMB 5,300/t ($819).
• Japanese scrap offers remain on the higher side: The bid and offer discrepancy for HRS101 kept buyers away from the scrap market. Bids from China are hovering at around $530-540/t CFR levels. However, offers are on the same levels as last week at $570-600/t CFR. Chinese buyers are showing more interest in semi-finished steel instead of scrap, SteelMint learnt from market sources.
• China’s iron ore spot prices fall, but still above $200/t: The spot price of benchmark Fe 62% iron ore fines inched down by $1.20/t to $221.10/t CFR China, with the spot market witnessing a surfeit of offers from end-users as they were in a hurry to resell cargoes. Demand for high-grade fines remained moderate with only a limited number of offers being tracked.