China’s domestic ferrous scrap prices are likely to fall after Shagang Steel reduced its scrap procurement price for the fifth time in the first eight days of April. After the revision effective Apr 7, prices for #2 HMS were at CNY2,330/mt del Jiangsu plant, down by CNY130/mt from Apr 4 inclusive of the 13pc VAT as per a Davis Index source.
In a week, the country’s largest electric arc-based steelmaker has slashed prices by around CNY220-230/mt including the recent price cut of CNY50/mt.
Chinese finished steel exporters are struggling to receive orders as global demand remains hampered due to lockdowns in many countries, particularly in Southeast Asia. Steel production in China has picked up to pre-COVID-19 outbreak levels. Prices of finished steel in both domestic and export markets, therefore, remain under pressure. Chinese HRC makers lowered their export prices pressured by cheaper offers from Russia and India. On April 8, HRC exports prices were at $405-410/mt FOB, down from $425-430/mt FOB in first few days of April. Indian steelmakers are exploring export opportunities as domestic demand remains hampered and offered re-rolling HRC for May delivery at $395-400/mt cfr China. Thus, Chinese steelmakers are looking to save their input cost to maintain profit margins.
Iron ore prices unlikely to fall
Davis Index sources in China believe prices are likely to remain flat amid higher transportation costs. Prices of iron ore fines on April 8 in China and Brazil were $103/mt, unchanged from March 31. However, the world’s largest iron ore producer Vale has estimated a drop in ore prices. Iron ore is used for making sponge which in turn is blended with ferrous scrap in an electric arc furnace.