China: Shagang Steel Cuts Scrap Purchase Price by USD 5/MT

Following weakening finish steel prices, Chinese steelmakers have recently cut domestic scrap prices slightly.

One of the largest ferrous scrap consumers in China, Shagang Jiangsu Steel group has reduced its scrap buying price by Chinese RMB 30/MT (USD 5) recently. As per latest price updates received, Shagang is now paying RMB 2,520/MT (USD 398) inclusive of 17% VAT for heavy melting scrap not lesser than 6 mm in thickness delivered to its headquarter works in Zhangjiagang Province in China.

In the latest price revision, Shagang Steel also cut purchase prices for other grades of scrap by RMB 30/MT (USD 5). Shagang is now paying RMB 2600/MT (USD 411) for premium grade HMS 1 scrap not lesser than 20 mm in thickness. While prices are at RMB 2420/MT (USD 382) and RMB 2290/MT (USD 362) for scrap with specification 4-6 mm and 2-4 mm thickness respectively.

However, on successively rising global scrap prices, in the beginning of this month, Shagang Steel had raised scrap purchase prices for prime grades actively by RMB 150/MT (USD 24) and finish long steel prices by RMB 250/MT (USD 40) respectively.

Shagang Steel is one of the leading steelmaker in China and has an annual production capacity of 31.9 MnT iron, 39.2 MnT steel and 37.2 MnT rolled products.

Following Shagang's price fall, few other major mills in China like Nanjing Steel, Maanshan Steel and Xingcheng Steel have also reduced their scrap buying prices. For other major provinces in China like Shandong and Guangdong domestic scrap buying prices have decreased by upto RMB 50/MT and RMB 90/MT respectively.

According to sources, demand for finish steel has not recovered fully as expected after New Year Holidays in China also steel inventories are on the higher side.

Weaken demand along with another major influencing factor as recently announced 25% tariff on imports of steel under section 232 in USA, could have resulted in fall in finish steel prices in China.

Shagang Steel rolled over long steel prices for mid -March - Shagang steel mill has kept long steel prices unchanged for mid-March. Prior to this, the steelmaker had raised 16-25 mm rebar prices by RMB 120/MT to RMB 4,300/MT (USD 679) (ex-works, including VAT) in early March. While the company also raised wire rod prices by RMB 250/MT(USD 39) in early March.