China: Shagang Steel to Raise Scrap Purchase Price by USD 10-15

As per updates received from sources, eastern China's largest private ferrous scrap consumer and EAF steelmaker - Shagang Jiangsu Steel group likely to announce the price hike for all grades of domestic steel scrap purchase by RMB 70-100/MT (USD 10-15) effective from today (29th June'19). The specific prices shall be based on the price of 2019-F10.

This price hike has observed in the wake of lingering tightness in supply of domestic scrap and recovering profit margins on finished steel encouraging steelmakers to keep their scrap consumption in production high. Against the background of ever-tightening controls on pollution and the persisting high price of imported iron ore, demand for ferrous scrap from all steelmakers has increased, as shared by the sources.

With recent price hike, Shagang Steel is expected to pay RMB 2,700-2,730/MT (USD 393-398) inclusive of 13% VAT for HMS (6-10 mm thickness) delivered to headquarter works situated in Zhangjiagang north of Shanghai in China, up RMB 70-100/MT against the last report of RMB 2,630/MT on 18th Jun'19.

Notably, this is the second price hike for domestic scrap purchase observed in Jun'19. Prior to this, the company had reported a hike in the prices due to a decline in the volume of scrap delivered to its works. Extreme weather conditions in provinces south of the Yangtze River are now disrupting steel scrap collecting and sorting while the EAF capacity utilization rate continued to decrease. Thus, domestic steel scrap prices are anticipated to witness moderate rises in the near term amid the seasonal decline in scrap availability.

Following the largest privately owned steel mill's lead, many leading scrap consumers in eastern regions also have hiked scrap purchase prices by RMB 50-100/MT in China.

Shagang Steel lowered finish long prices for end-June shipments - Steelmaker had lowered finished steel prices on slower sales in the local steel market. Shagang is selling HRB400 16-25 mm dia rebar at RMB 3,970/MT (USD 581) over the mid-June (21th-30th) period, down RMB 100/MT against the last set of prices for mid-Jun'19 shipments. While prices for HPB300 6.5 mm dia wire rod lowered to RMB 4,070/MT (USD 593), down RMB 80/MT as against the last set. All prices are on an ex-works basis, including VAT.