China’s largest EAF steelmaker, the Jiangsu Shagang Group, announced a sharp rise in its scrap purchase prices on 12 Oct’21.
The steel producer raised its scrap procurement prices by RMB 100/tonne (t) ($15/t) for all grades, with immediate effect from 12 Oct’21, sources confirmed. This week, the Chinese steel market gained momentum across product categories post-the week-long National Day holidays.
After the latest round of revisions, prices of HMS (6-10 mm) stand at RMB 3,860/t ($598/t), inclusive of 13% VAT, delivered to headquarters.
Factors behind the rise in prices
- Lower inventories of scrap: Scrap collections are learned to have remained slow during the Golden Week holidays, resulting in lower scrap inventories with the mills. This, in turn, compelled mills to raise bids in order to secure deliveries.
- Increased iron ore spot prices: The spot price of the standard iron ore Fe62% fines rose by $11.9/t d-o-d to $136.95/t CFR China yesterday, as per latest reports. The sudden hike in prices was due to Chinese restocking which sustained on enhanced steel production. Demand for medium-to high-grade fines as well as direct feed remained high as mills wanted to replenish stocks after the holidays had ended last week, on apprehensions of winter sintering controls.
- Chinese billet prices improved: Steel billet prices in China’s Tangshan rose by RMB 40/t ($6/t) on 11 Oct’21. Domestic billet prices stood at RMB 5,330/t ($828/t), inclusive of 13% VAT.
- Supportive steel prices: One of China’s key steelmakers, Jiangsu Shagang Steel, increased re-bar prices by RMB 100/t ($15/t) for early-Oct’21 sales. During the Chinese Golden Week holidays, buyers showed subdued interest in buying which improved after the holidays ended. Prices picked up w-o-w over strong demand from the end-user industries post-holidays.
Outlook
It is expected that scrap prices will remain supported on tight supply in China and higher global prices.
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