Shagang Group, China's leading electric arc furnace (EAF) steelmaker headquartered in Jiangsu, has increased its scrap procurement prices by RMB 100/t ($16/t), effective from 23 Mar'22, in an attempt to secure deliveries.
Current prices of HMS (6-10 mm) stand at RMB 3,870/t ($607/t), including 13% VAT, delivered to headquarters. Notably, the company's scrap purchase bids have hit a 10-month high. Similar levels were last seen in end-May'21.
Factors supporting price hike
Mills try to secure more scrap deliveries: The wait-and-watch stance adopted by many Chinese scrap traders has resulted in a decline in scrap deliveries to mills. Consequently, some mills have raised their scrap purchasing prices to draw more deliveries to maintain normal production level.
China's billet price hike: Steel billet prices in China's Tangshan rose by RMB 40/t ($6/t) to RMB 4,720/t ($740/t), inclusive of 13% VAT, on 22 Mar'22 as against RMB 4,680/t ($734/t) on 16 Mar'22. Demand for finished steel (both longs and flats) increased.
SHFE rebar futures rise: According to data, China's SHFE rebar futures contract for May'22 delivery closed at RMB 4,918/t ($772/t) on 22 Mar'22, a sharp rise of RMB 14/t ($2/t) against RMB 4,904/t ($769/t) on 16 Mar'22.
Supportive finished steel prices: China's Shagang Steel has rolled over long steel product prices for late-Mar'22 sales. Currently, rebar (16-25 mm) is at RMB 5,200/t ($816/t), wire rods (6-10 mm) at RMB 5,310/t ($833/t), coiled rebar (8-10 mm)at RMB 5,400/t ($847/t). However, in mid-March, prices increased by $32/t amid bullish global sentiments and the increase in raw material costs.
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