China: Shagang Steel lifts scrap buy prices after almost 4-month gap on market recovery

China’s leading electric arc furnace (EAF) steelmaker, Jiangsu Shagang Group, has hiked its scrap purchase prices after an almost four-month gap. Scrap prices show a sign of recovery on the back of improving demand and sales in the finished steel market.

The steelmaker has hiked prices by RMB 100/tonne (t) ($15/t) for all grades against the last revision on 18 July. Current prices of HMS (6-10 mm) are at RMB 2,770/t ($411/t), including 13% VAT, delivered to headquarters.

After prices hit the bottom following fifteen consecutive cuts, Shagang Steel raised bid prices to improve deliveries. At present, there is a supply crunch in the scrap market and demand from the construction sector is on the rise.

The Chinese government is also taking several steps towards developing and boosting the economy by rolling out various policies, as per sources.

Market scenario-

• Billet prices recover: Steel billet prices in China’s Tangshan were at RMB 3,630/t ($538/t), inclusive of 13% VAT on 29 July. Spot prices recovered by RMB 80/t ($12/t) w-o-w, as per data maintained with SteelMint. Prices recovered following a sharp increase in rebar futures due to an economic rebound in the country with few mills resuming operations.
• Rebar futures rebound w-o-w: According to data maintained with SteelMint, China’s SHFE rebar futures contract for Oct’22 delivery closed on 29 July at RMB 3,996/t ($592/t), witnessing a sharp recovery of RMB 133/t ($20/t) w-o-w.
• Spot iron ore prices up: Seaborne iron ore prices increased by $10/t w-o-w on 29 July. The 62% Fe iron ore index stood at $114/t CFR North China on improving steel prices.
• Imported scrap prices drop: Imported scrap prices fell by $5/t against last week’s closing. Prices of USA-origin shredded material stood at $424/t and HMS at $404/t, both on CFR basis.

Outlook
A further fall in domestic scrap prices is less likely as the coming weeks are the peak season for construction activities. It is expected that scrap price will fluctuate in the short-term tending to up slightly.