China’s leading electric arc furnace (EAF) steelmaker, the Jiangsu Shagang Group, has cut its scrap purchase prices for the third time in May 2022. The steelmaker reduced its scrap procurement prices by RMB 100/tonne (t) ($15/t), for all grades with immediate effect, sources confirmed. With this, Shagang’s scrap purchase prices have fallen to a two-month low.
With this downward correction, current prices of HMS (6-10 mm) stand at RMB 3,820/t ($574/t), including 13% VAT, delivered to headquarters, compared to RMB 3,920/t ( $587/t) on end-March 2022.
At present, Chinese supply and demand in the steel market remain weak. Mills adjusted the scrap prices due to the continued softening of finished steel prices.
In the meantime, Japanese scrap imported scrap prices, too, noticed a sharp fall of $40/t from $535/t on 13 May to $495/t CFR level today.
China market overview
- Downtrend in billet prices: Steel billet prices in China’s Tangshan fell by RMB 190/t ($29/t) on 24 May 2022 amid a sharp fall in rebar futures and weakening demand due to the approaching monsoon season. Prices stood at RMB 4,470/t ($670/t) against RMB 4,660/t ($699/t) on 13 May 2022, inclusive of 13% VAT.
- Rebar futures fall sharply: According to SteelMint’s data, China’s SHFE rebar futures contract for October 2022 delivery was closed yesterday at RMB 4,468/t ($670/t), down by RMB 202/t ($30/t) from RMB 4,607/t ($691/t) on 13 May 2022.
- Spot iron ore prices largely stable: Benchmark Fe 62% fines prices are at $130.5/t CFR China on 24 May 2022, against last week. However, prices fell on a d-o-d basis by $5/t, as concerns over weak steel margins continue.
Outlook
It is expected that in the short term, scrap prices will slightly see some fluctuation.
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