Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Chinese steelmaker Shagang Steel has cut its domestic ferrous scrap purchase prices by CNY30/mt ($4.3/mt) effective Sep 16. The steelmaker has lowered scrap prices for the first time since early July. Instead of expected recovery, rebar demand has turned weak in China. Also, steel futures came under pressure pulling down prices in the physical markets. Most EAF-based steel producers face margin squeeze amid weak steel prices. 


Shagang steel, one of the leading ferrous scrap consumers in eastern China, has lowered purchases prices twice in September bring them down by a total of CNY60/mt amid falling domestic billet prices. Earlier Shagang Steel had cut prices on Sep 12. 


Effective Sep 16, bids for domestic HMS scrap stand at CNY2,740/mt ($404/mt) delivered to mill in Jiangsu province. The prices reached a 13-month high at CNY2,800/mt delivered to mill in Zhangjiagang, inclusive of 13pc value-added tax. 


Fall in billet prices 

Chinese domestic billets are being offered at CNY3,370/mt ($498/mt) ex-Tangshan down from a high of CNY3,500/mt last week. Chinese domestic scrap prices, however, had recorded a sharp recovery after hitting a two-year low of CNY2,200/mt ex-works in Mar-Apr, during the COVID-19 pandemic. 


Lower imports 

Chinese importers have reduced inquiries for billet amid lower domestic steel prices. Most billet exporters in India, Russia and Iran have shifted their focus on to Southeast Asian or African markets. It is expected that domestic steel price could drop further making Chinese importers more cautious. Chinese domestic billet equivalents are trading at $460-465/mt cfr SE Asia, against last trade from Indian exporter at $450/mt cfr Philippines, creating room for Chinese billet prices to drop further, said a trader. 


Rebar demand thins

Shagang Steel has held finished steel prices flat for mid-September deliveries. Offers for rebars HRB400 16-25mm diameter are at CNY3,900/mt ($576/mt) ex-works for mid-September deliveries stable since late August deliveries. Wire rods (HPB300, 8mm) are at CNY4,060/mt ($593/mt) ex-works, while HRC Q235B is at CNY4,380/mt ($647/mt) ex-works Jiangsu. In the domestic market, amid thin trades, rebar prices fell by CNY80-100/mt to CNY3,680-3,700/mt ($543-546/mt) from early September.



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