China’s electric arc furnace (EAF) steelmaker Jiangsu Shagang Group’s scrap purchase prices fell to almost a 2-year low since October 2020. After rebar futures plunged, the sales of finished products are stagnant, and mills are facing serious losses. Therefore, to control the loss, the company has cut steel scrap buy prices.
The steelmaker has cut prices by RMB 150/tonne (t) ($22/t) for all grades. Current prices of HMS (6-10 mm) are at RMB 2,770/t ($412/t), including 13% VAT, delivered to headquarters.
After five consecutive price cuts in domestic scrap, the market has fallen sharply this week. Many yards in China chose to suspend scrap offers amid high volatility. Shagang Steel continuously bottomed down the purchase price, causing panic among participants. At present, some mills are stick to lower output or maintenance, thus, their willingness to use scrap is greatly reduced.
Market highlights-
- Billet price slips to over 1.5 year low: Steel billet prices in China’s Tangshan decreased by RMB 70/t ($10/t) on 14 July d-o-d following a sharp decline in rebar futures. Prices stood at RMB 3,580/t ($529/t), falling to over 1.5 years low. Prices are inclusive of 13% VAT.
- Rebar futures plunge: As per data maintained with SteelMint, China’s SHFE re-bar futures contract for October 2022 delivery closed at RMB 3,833/t ($567/t), falling by RMB 77/t ($11/t), on 14 July. Futures have fallen by RMB 363/t ($54/t) w-o-w.
- Spot iron ore prices slump: Seaborne iron ore prices fell sharply on 14 July due to continued weakness in steel demand and poor seaborne buying interest. The 62% Fe iron ore index was at $100/t CFR North China, down $9.15/t.
- Imported scrap prices drop: Imported scrap prices, too, noticed a sharp fall of $10/t d-o-d on 15 July. Prices of Japan-origin H2 material are at $415/t CFR levels.
Outlook
Mills remain pessimistic as both supply and demand are weak. It is expected that the local scrap market will remain sluggish in the short term.
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