China: Shagang Group cuts scrap buy prices by $7/t on weak steel market sentiments

China's leading electric arc furnace (EAF) steelmaker, Jiangsu Shagang Group, has reduced its scrap purchase prices towards the end of last week owing to bearish demand due to the off-season and sluggish domestic finished steel sales.

Moreover, many steel mills are opting for maintenance shutdowns which has lowered output, as per SteelMint sources.

The steelmaker has cut its scrap procurement prices by RMB 50/tonne (t) ($8/t) for all grades. Current prices of HMS (6-10 mm) are at RMB 3,250/t ($484/t), including 13% VAT, delivered to headquarters.

Market overview

• Rebar futures continue to fall: China's SHFE rebar futures contract for October 2022 delivery closed at RMB 4,049/t ($603/t) on 11 July, falling by RMB 147/t ($22/t) against last week's closing.
  
  
• Iron ore spot prices drop: Due to muted trading activities in the market, the Fe62% iron ore index fell to $114/t CFR North China on 8 July.
  
  
• Imported scrap prices up on global cues: Interestingly, imported scrap prices rose by $15/t compared to last week's closing. Prices of USA-origin shredded material are at $444/t and HMS at $424/t, both on CFR basis.
  
  

Outlook
It is expected that prices may fluctuate in the short term as the ongoing off-season has adversely impacted demand for scrap.