China: Shagang Steel Raises Scrap Purchase Price by USD 30/MT

The largest ferrous scrap consumer in China, Shagang Steel group has recently hiked its scrap buying prices further by Chinese Yuan 200/MT (USD 30). As per latest price update, Shagang is now paying CNY 2,480/MT (USD 375) inclusive of 17% VAT for Heavy Melting Scrap not lesser than 6 MM in thickness delivered to its works in Zhangjiagang Province in China. Shagang has also hiked domestic rebar prices by further CNY 200/MT now.

The bid prices of ferrous scrap updated recently are hiked by USD 30/MT (CNY 200) than the bids Shagang placed lastly. Earlier to this, the company was fetching HMS scrap at CNY 2,280/MT (USD 345) including 17% VAT as per revision on 3rd Dec’17. These prices are noted at the highest since last three years. The peak achieved earlier to this was at CNY 1,860/MT during Aug-Sept’15.

Shagang steel has an annual production capacity of 31.9 MnT iron, 39.2 MnT steel and 37.2 MnT rolled products. It manufacture leading steel products like wide heavy plate, hot-rolled strip coil, high-speed wire rod, large bundle of wire rod, ribbed steel bar, special steel round bar along with 60 series and more than 700 varieties with nearly 2000 specifications.

Rising Chinese scrap industry at fast pace –

Following Shagang’s price hike, other major mills in eastern China including Yonggang Steel, Changzhou Dongfang Special Steel and Xingcheng Steel also increased their scrap buying prices by CNY 180-220/MT.

The total consumption of steel scrap in China exceeded 101 million tons with an increase of 56.5% Y-o-Y during Jan-Sep’17; Scrap ratio as feedstock reached 15.85% with an increase of 5% Y-o-Y over the same period. Which is likely to increase consumption of domestic scrap in China.

Chinese scrap recycling plants are mushrooming at the fast pace, additionally, as per new duty changes in the absence of the export duty, there would be no restriction on sales. It may be noted that earlier 40% export duty on Chinese scrap has been one of the biggest hurdles restricting Chinese scrap from sweeping across the Asian markets. Thus scrap stock expected to surge further in China and may subsequently flood global market.