Shagang cuts another $7 per tonne off steel scrap procurement price

Shagang Group, China's largest privately-owned steel producer in Jiangsu province, East China, has announced a 50 yuan ($7) per tonne cut to its scrap procurement prices due to lower steel scrap consumption by domestic steel mills amid thin profits or even losses, market sources said

Shagang’s price policy of steel scrap is widely viewed as the weathervane of the country’s scrap market movement; Shagang is a leading electric-arc-furnace (EAF) producer in China, while it also hosts huge blast furnace (BF) capacity. The steelmaker has reduced its scrap procurement price by a total of 520 yuan per tonne since June 14 and it is paying 3,300-3,360 yuan per tonne for domestically-sourced heavy scrap as of July 6.

“Steel scrap buying [of Chinese steelmakers] has been thin so far this week and there is no sign of recovery, which is probably due to low profitability,” a steel trader based in East China said.

Chinese steel mills’ scrap consumption is at a multi-year low, a Shanghai-based scrap analyst said at a recent industrial event.

The utilization rate of steel scrap in steelmaking in China was only 17.98% at the end of June, down by 1.28% from a week ago and down by 6.08% from a year-to-date peak in March, according to the analyst.

“Some steel mills have kept their scrap utilization to only 1-2%. They just use the scrap generated by themselves, but don’t buy any extra from the market,” the analyst said.

A few steel producers in North China told Fastmarkets that they have stopped scrap procurement in recent weeks.

“The problem for Chinese steel mills now is how to deplete high finished steel stocks and how to lower production costs so they have no need to increase production. BF makers [aim to] have no need to even use scrap,” an official from a mill said.

More BF mills have recently announced maintenance plans due to poor finished steel demand, high finished steel stocks and low profitability. The capacity utilization rate of Chinese EAF makers declined to 35.59% at the end of June, according to the Shanghai analyst.

What to read next
Major Asian steelmakers have been striving to develop decarbonization technologies for the current blast furnace-basic oxygen furnace (BF-BOF) steelmaking, given the global green steel production drive and large number of existing blast furnaces built in recent years.
The growth is largely expected to be driven by stricter environmental regulations, increasing pressure from consumers and investors for sustainable products, and the region's commitment to achieving carbon neutrality, according to sources.
After years of insufficient domestic supply that brought prices to record highs, China’s fluorspar supply tightness will ease in 2025 due to several newly developed mining sites as well as rising imports from Africa, sources told Fastmarkets, adding that demand from batteries, especially the energy storage sector (ESS), will continue to rise.
Participants in the market for copper scrap and blister in China, the world’s largest importer of copper raw materials, expect there to be fiercer competition for material in 2025, industry sources told Fastmarkets in the week to Thursday January 9.
The biggest threat to keeping carbon emissions low in the steel industry is imports flowing in from regions where there is a lack of focus on emissions reduction, Kevin Dempsey, president and chief executive officer of the American Iron and Steel Institute, said at Fastmarkets’ second annual Circular Steel Summit on Wednesday January 15 in Houston, Texas.
How Trump’s 2025 trade tactics could shape the future of the US steel industry, with expert insights and predictions.