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

Shagang Steel in China has registered total price drop of RMB 120/MT for scrap purchase since 28th December

The largest ferrous scrap consumer in China, Shagang Jiangsu Steel group has cut its scrap buying prices by Chinese Yuan 30/MT (USD 5) yesterday (i.e. 09th Jan). As per latest price update, Shagang is now paying RMB 2,560/MT (USD 394) inclusive of 17% VAT for heavy melting scrap (HMS 3) not lesser than 6 mm in width delivered to its works in Zhangjiagang Province in China.

Earlier to this, the company was fetching the same grade at RMB 2,590/MT (USD 399) including 17% VAT as per revision on 01 Jan'17. This is fourth consecutive price drop company has witnessed since 28th Dec'17 through which Shagang Steel has lowered total scrap purchase prices by RMB 120/MT (USD 18) now.

Shagang Steel also cut the scrap purchase prices for HMS 1 scrap not lesser than 20 mm in thickness by RMB 30/MT in the latest price revision. Shagang is now paying RMB 2640/MT (USD 405) for scrap not lesser than 20 mm in thickness. While RMB 2460/MT and RMB 2330/MT for scrap with specification 4-6 mm and 2-4 mm width respectively.

Shagang Steel has been lowering the scrap buying prices successively in parallel with continuously falling domestic rebar prices in China. Following Shagang's price cut, few other major mills in eastern China cut their scrap buying prices further. Sources are of the view that scrap prices had been too high compared with the cost of steelmaking with the blast furnace. (The combined cost of iron ore and coking coal.) Scrap prices had been hiked sharply in last one month's time compared with respective price increase in coking coal and iron ore. Thus leading scrap consumers are lowering the scrap purchase prices in China.

Shagang steel has an annual production capacity of 31.9 MnT iron, 39.2 MnT steel and 37.2 MnT rolled products. It manufactures leading steel product like wide heavy plate, hot-rolled strip coil, high-speed wire rod, large bundle of wire rod, ribbed steel bar, special steel round bar along with 60 series and more than 700 varieties with nearly 2000 specifications.