China’s leading electric arc furnace (EAF) steelmaker, Jiangsu Shagang Group has cut its scrap purchase prices today after a month’s break. The steel producer reduced its scrap procurement prices by RMB 50/tonne (t) ($8/t) for all grades with immediate effect, sources confirmed.
With this downward revision, current prices of HMS (6-10 mm) stand at RMB 3,970/t ($593/t), including 13% VAT, delivered to headquarters.
Mills adjusted the prices due to softening of finished steel prices, as the market opened after a week-long Labour Day holidays. Improved scrap deliveries after the holidays and COVID-19 restrictions and the decline in steel prices have resulted in lowering of scrap purchase bids. Notably, the company reduced prices almost after five months.
Factors supporting the cut
- Reduction in billet prices: Steel billet prices in China’s Tangshan witnessed a sharp fall of RMB 50/t on 9 May. Prices stood at RMB 4,680/t ($697/t), inclusive of 13% VAT, as against RMB 4,730/t ($743/t) on 11 April. A sharp fall in rebar futures leads to a fall in billet prices.
- Downtrend in rebar futures: According to data maintained with SteelMint, China’s SHFE rebar futures contract for October 2022 delivery closed yesterday, i.e. 9 May at RMB 4,654/t ($693/t), witnessing a sharp fall of RMB 213/t ($32/t), against the closing on 11 April.
- Spot iron ore prices at two-month low: The spot price of iron ore fell to a two-month low on 9 May due to persistent concerns about Chinese steel demand and seasonally higher iron ore supply. Benchmark Fe 62% fines prices fell by $7.65/t to $131.35/t CFR China.
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