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China: Shagang Steel lifts scrap purchase prices for fourth time in May, by $42/t

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Melting Scrap

BigMint Bureau

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13 May 2021, 19:58 IST

China: Shagang Steel lifts scrap purchase prices for fourth time in May, by $42/t

Shagang Steel - a leading steel enterprise in Jiangsu province in East China, sharply hiked its scrap buying prices on 13 May'21 by RMB 270/t ($42) for all grades. Currently, the company is paying RMB 4,190/t ($649) for HMS (6-10 mm), inclusive of 13% VAT, delivered to its headquarters at Zhangjiagang, located north of Shanghai. The steelmaker lifted the scrap purchase prices for the fourth time in May, in keeping with the rise in global and domestic scrap rates.

Other major grades such as HMS 10-20 mm are at around RMB 4,220/t ($654) and HMS not less than or equal to 20 mm thickness are at around RMB 4,250/t ($659). The company revised its prices twice this week taking the total hike to RMB 650/t ($101) in May'21 till date.

Chinese domestic scrap prices have been continuously rising since end-February. The surge in prices was supported by strong demand for raw materials and steel. As a result, these prices are likely to continue rising in the near term.

Factors supporting price hike:

Chinese billets prices rise further: Chinese domestic billets prices further increased on 13 May'21to RMB 5,820/t ($902), ex-Tangshan, including 13% VAT. It is expected that billets prices may go up further in the near term. Prices have risen by RMB 690/t w-o-w.
Shagang Steel raises long steel price by RMB 600/t ($93): The company has increased its construction steel prices by RMB 600/t for mid-May sales, effective 11 May'21. The current price for rebar (16-25mm) is at RMB 6,150/t ($953) ex-mill, inclusive of taxes.

Japanese scrap prices rise for China post-Kanto tender: Japanese scrap offers have increased after the Kanto tender concluded this week. Bids for Japanese HRS grade scrap in China have risen to $545/t, CFR China. Market participants believe that Japanese scrap offers are expected to move up in the coming days as bids fetched in the Kanto tender are significantly higher than the market price.
Spot iron ore prices climb on demand expectations: Spot iron ore Fe 62% fines rose by $4.2/t d-o-d to $233.1/t CFR China as demand is expected to remain firm. Most sources do not see demand for low-grade fines recovering any time soon. The iron ore futures market remained positive on 12 May'21 on improved demand outlook. The most-traded September contract of the Dalian Commodity Exchange iron ore futures closed higher by RMB 30.5/t d-o-d.

Outlook: The market is concerned about the price trends of finished steel and it is expected that domestic scrap prices may continue to rise in the short term.