Shagang cuts scrap prices by $7.4/t for 1st time in May

With the latest price adjustment, Shagang, headquartered in East China's Jiangsu province, is paying Yuan 3,970-4,030/t for HMS grade scrap including delivery and the 13% VAT.

Chinese steel prices have been trending south recently, and as of May 9, the country's price for HRB400E 20mm dia rebar under Mysteel's assessment fell Yuan 94/t from May 6 to Yuan 5,020/t and including the 13% VAT.

"After noting their steel margins squeezed substantially by the recent slump in steel prices, Shagang had to pass the pressure to raw material suppliers including steel scrap," a Shanghai-based market watcher explained.

Another factor prompting Shagang's decision to cut its scrap price is the uptick in scrap deliveries to its steelworks recently. According to Mysteel's latest survey, the average volume of scrap being delivered to Shagang's Zhangjiagang steelworks in Jiangsu has increased by 16.8% on day or 43.1% on week to average 19,506 tonnes/day as of May 9.

"Although some scrap traders are still confident about the near-term market trend amid the overall limited scrap availability, the recent decline in steel prices and other raw materials has fueled their concerns. So traders are speeding up scrap deliveries to maximize their profit margins while they still can," the market watcher observed.

As usual, Shagang's latest scrap price cut has wavered the spot scrap prices in Zhangjiagang, with the local price of the 6-8mm common-grade carbon steel scrap down Yuan 20/t on day to Yuan 3,350/t excluding the 13% VAT on May 10.

Shagang's scrap price policy has also been followed shortly by another 52 Chinese steel mills, which cut their scrap procurement prices by Yuan 20-70/t on Tuesday, Mysteel Global noted.

Written by Lindsey Liu, liulingxian@mysteel.com

Edited by Zhenqi Yang, yangzhenqi@mysteel.com