Shagang raises ferrous scrap purchase prices by $7/t
After the latest adjustment, Shagang is paying scrap dealers Yuan 2,850-2,910/t for domestically processed HMS grade scrap, including delivery to its plants and the 13% VAT, according to the announcement.
The firm rebound of domestic steel prices in the past few days saw the company's profit margins improve, so it was willing to increase its costs on steelmaking raw materials again, Mysteel Global noted. Meanwhile, overall sentiment in the domestic steel market has been boosted strongly by the introduction of multiple stimulus policies for the property market, as reported.
On the other hand, the steelmaker has seen deliveries from scrap dealers drop rapidly since late last week, and it needs to ramp up the procurement of feed materials to meet its immediate demand, Mysteel Global learned.
On May 21, the total volume of steel scrap arriving at Shagang's steelworks in Jiangsu's Zhangjiagang city dropped by a significant 24.8% on week to reach 12,410 tonnes/day, much lower than the company's daily scrap consumption at around 16,000 t/d, according to Mysteel's tracking.
As of the same day, the total ferrous scrap inventories piled at the company's Zhangjiagang works hovered low at 253,243 tonnes, Mysteel's survey showed.
Shagang's price hike has provided upward momentum for the ferrous scrap prices in East China, Mysteel assessed, with the transaction price of 6-8mm carbon steel scrap in Zhangjiagang rising Yuan 20/t from the previous day to reach Yuan 2,510/t excluding the 13% VAT by Wednesday morning.
The company's move also encouraged more steelmakers across the country to follow suit on Wednesday morning, with another 31 steelmakers announcing similar increases in their steel scrap buying prices in the range of Yuan 10-80/t, Mysteel Global learned.
Written by Anthea Shi, shihui@mysteel.com
Edited by Alyssa Ren, rentingting@mysteel.com
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