China's Shagang Steel Further Reduces Scrap Purchase Price by USD 9/MT

Since last 3 days, Shagang Steel has announced its third consecutive price cut for scrap purchase resulting in the total price cut of RMB 160/MT since Saturday (13th Jan'18).

One of the largest ferrous scrap consumer in China, Shagang Jiangsu Steel group has cut its scrap buying price by Chinese RMB 60/MT (USD 9.3) today (i.e. 16th Jan'18). As per latest price update, Shagang is now paying RMB 2,400/MT (USD 373) 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.

Earlier to this price revision, the company was fetching the same grade at RMB 2,460/MT (USD 384) including 17% VAT as per yesterday's price revision. Thus the company has now witnessed five consecutive price drops since 1st Jan'18, through which Shagang Steel has lowered total scrap purchase prices by RMB 220/MT (USD 34).

Shagang Steel also cut the scrap purchase prices for HMS 1 scrap not lesser than 20 mm in thickness by RMB 60/MT in the latest price revision. Shagang is now paying RMB 2480/MT (USD 386) for scrap not lesser than 20 mm in thickness. While prices are at RMB 2300/MT and RMB 2170/MT for scrap with specification 4-6 mm and 2-4 mm thickness respectively.

Shagang steel has an annual production capacity of 31.9 MnT iron, 39.2 MnT steel and 37.2 MnT rolled products.

Sources are of the view that many of the steel mills have now turned resistant for scrap purchase at high prices amid enough inventories already available to them. Following Shagang's price cut, few other major mills in eastern China have dropped their scrap buying prices.

Chinese domestic rebar and billet prices also have fallen in a week's time. Shagang Steel has been lowering the scrap buying prices successively in parallel with continuously falling domestic rebar prices in China. Domestic billet prices in China are today assessed at RMB 3,510/MT against last week's assessment of RMB 3,570/MT (including 17% VAT). On similar lines, domestic rebar prices in China have also declined to RMB 3,720-3,760/MT yesterday against last week's assessment of RMB 3,870-3,950/MT (ex-works).

Last week, Shagang Steel has slashed its long steel prices for mid-Jan by RMB 300/MT from its last price.