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China: Shagang hikes scrap purchase prices by $23/t on tight availability

China’s leading electric arc furnace (EAF) steelmaker, the Jiangsu Shagang Group, raised its scrap purchase prices by RMB 150/t (tonne) ($23/t) today. Notably, ...

Melting Scrap

BigMint Bureau

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21 Dec 2021, 17:02 IST

China: Shagang hikes scrap purchase prices by $23/t on tight availability

China's leading electric arc furnace (EAF) steelmaker, the Jiangsu Shagang Group, raised its scrap purchase prices by RMB 150/t (tonne) ($23/t) today. Notably, this is the third hike in this month. With this, the company's scrap purchase bids have hit over a one-month high as similar price levels were seen in early Nov'21.

Current prices of HMS (6-10 mm) stand at RMB 3,590/t ($563/t), including 13% VAT, delivered to headquarters.

Factors behind the price hike

Tight availability of scrap: The steel producer raised its scrap procurement prices in order to attract more scrap deliveries, sources informed SteelMint.
China's billet prices rise: Steel billet prices in China's Tangshan rose by RMB 60/t ($9.5/t) to RMB 4,420/t ($693/t), inclusive of 13% VAT, on 20 Dec'21 as against RMB 4,360 ($684/t) on 17 Dec'21. Prices rose following recent announcements on air pollution curbs. However, physical trading remained limited.
SHFE rebar futures show uptrend: According to SteelMint data, China's SHFE rebar futures contract for May'22 delivery closed at RMB 4,475/t ($702/t) on 20 Dec'21, a significant rise of RMB 153/t ($24/t) against RMB 4,322/t ($678/t) on 10 Dec'21.
China's spot iron ore prices up w-o-w: Prices of Chinese spot iron ore fines Fe 62% closed at $123/t CNF China on 20-Dec'21, increasing w-o-w by $13/t, on restocking needs, as per data maintained by SteelMint.

Outlook
Scrap prices may see some fluctuations due to the winter season which traditionally keeps availability restricted.

Shagang has rolled over its long steel prices for end-December sales after announcing a hike of RMB 150-200/t in mid-Dec'21. Current prices of rebar of 16-25mm are at RMB 5,000/t ($785/). Wire rods of 6-10mm are at RMB 5,210/t ($818/t) and coiled rebar of 8-10mm, at RMB 5,300/t ($832/t), exw and inclusive of taxes. It would be interesting to see if the mills are able to pass on the hike in scrap prices to the finished steel end-users as well.