China: Shagang Steel hikes scrap buy prices by $7/t after 3-week pause

China's largest electric arc furnace (EAF) steelmaker, Jiangsu Shagang Group, raised its scrap buy prices on 5 December 2022. This is the first revision since 15 November last.

The steelmaker has lifted prices by RMB 50/t ($7/t) for all grades against the last revision on 15 November. After the latest revision, HMS (6-10 mm) prices are RMB 2,960/t ($425/t) delivered to headquarters, including 13% VAT, effective from 5 December.

Although the company has lifted its scrap purchase prices, finished steel sales in the market are still subdued. EAF steel producers are sustaining losses and constraints in scrap supply exist.

Market highlights

• Local billets prices rise w-o-w: Domestic billets prices in China's Tangshan increased by RMB 30/t ($4/t) w-o-w to RMB 3,550/t ($510/t), inclusive of 13% VAT on 2 December.
  
  
• Rebar futures up d-o-d: China's SHFE rebar futures contract for May 2023 delivery closed on 2 December at RMB 3,808/t ($542/t), up RMB 75/t ($11/t) d-o-d.
  
  
• Iron ore spot prices rise d-o-d: The Fe 62% iron ore index was at $103.10/dry mt CFR North China on 1 December, up $1.95/t from the last closing. The relaxation of Covid-19 restrictions in several cities in China boosted sentiments.
  
  

Imported scrap prices up w-o-w: Prices of US-origin HMS and shredded scrap stood at $379/t and $ 399/t, respectively, up $10/t w-o-w.

Outlook
Shagang Steel may procure more quantities as the easing of Covid-19 curbs in a number of Chinese cities is expected to improve transportation. In the short run, this may be a shot in the arm for construction steel demand and, as a result, scrap prices too.