China’s largest EAF steelmaker, the Jiangsu Shagang Group, announced a cut in its scrap purchase prices on 22 Oct’21. The steel producer decreased its scrap procurement prices by RMB 80/tonne (t) ($13/t) for all grades, with immediate effect from 22 Oct’21, sources confirmed.
This week, under the impact of the severe drop in finished steel prices, the scrap acquisition prices of most steel mills declined.
One of the major reasons behind the decline is the weakened buying interest due to China’s production cuts and power issues which have resulted in a lack of trading interest.
After the latest round of revisions, the prices of HMS (6-10 mm) stand at RMB 3,780/t ($591/t), including 13% VAT, delivered to headquarters.
Factors behind the decline in prices
- Iron ore futures and spot prices: DCE iron ore futures Jan’22 contract yesterday closed at RMB 650.5/t ($101.36), down RMG 59.5/t. The spot price of the benchmark iron ore Fe62% fines decreased by $8.5/t, w-o-w, on 21 Oct to $117.5/t CFR China as against $126/t, CFR China a week back.
- China steel billet prices down RMB 180/t ($28/t): Tracking the constant drop in rebar futures owing to weak demand which is currently the main driving force in the global steel segment and scarcity of coal, steel billet prices in China’s key steel producing hub of Tangshan witnessed a sharp, fall of RMB 180/t ($28/t) this week, Domestic billet prices stood at RMB 4,990/t ($781/t), including 13% VAT.
China’s rebar futures contract on SHFE for Jan’22 delivery closed today at RMB 4,900/t ($767/t), down RMB 76/t ($12/t)
Outlook
It is further expected that scrap prices might continue to show a downtrend due to slower trading on account of the production cuts.
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