Shagang lifts scrap buying prices 3rd time in Aug by $30/t
Shagang, headquartered in Zhangjiagang city, East China's Jiangsu province, is now paying Yuan 3,070-3,130/t for domestically-sourced HMS grade scrap including the delivery and the 13% VAT after the latest price increment.
"Most Chinese steelmakers' profit margins have been largely improved thanks to the recent strengthening in steel prices, which led to their increasing demand for steel scrap," a Shanghai-based market watcher commented.
"Meanwhile, there have been notable declines in steel scrap deliveries to Shagang's works, and some other Chinese steelmakers have also raised their scrap buying prices recently to secure supplies. So Shagang's price increase seems to be quite unavoidable," she added.
As of August 9, scrap deliveries to Shagang's Zhangjiagang steelworks hovered at a multi-year low of only 306 tonnes/day, according to Mysteel's daily tracking.
Shagang's latest price adjustment, again, has led to a new round of scrap price increases, with another 27 Chinese mills immediately adopting the same policy to lift their scrap buying prices by Yuan 30-200/t starting today.
For example, the spot price of 6-8mm common grade carbon steel scrap in Zhangjiagang under Mysteel's assessment grew by Yuan 60/t on day to Yuan 2,650/t excluding the 13% VAT as of Wednesday morning.
Shagang's three successive price increments, however, has failed (may not be able) to attract more deliveries to its steelworks in the near term, as high temperatures and heavy rainfalls are lingering in most parts of China and have been seriously disrupting social collection of scrap and processing, market sources shared.
"Even if we want to deliver more scrap, our hands are tied with the current situation, and these three rounds of scrap price inclines so far couldn't make up our losses in the previous month. So we will have to take it slow instead of selling more scrap, though the prices have been rising," a scrap trader in East China's Zhejiang province said.
Written by Lindsey Liu, liulingxian@mysteel.com
Edited by Zhenqi Yang, yangzhenqi@mysteel.com
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