East China's ferrous scrap prices fell sharply this week amid weaker raw material, finished steel and steel futures markets in the first-half of the week.
Platts assessed heavy scrap over 6 mm at Yuan 2,320/mt ($377/mt) on a delivered basis to Zhangjiagang City in Jiangsu province, including value added tax, down Yuan 100/mt from last week.
Shagang Group, the largest scrap consumer in eastern China's Jiangsu province, cut its purchase price by Yuan 30/mt on Wednesday, following previous price cuts of Yuan 30/mt and Yuan 40/mt, respectively, on March 8 and 10, Platts previously reported. Its price for heavy scrap above 6 mm this week fell to Yuan 2,240/mt ($364/mt) delivered, including VAT.
Other leading steelmakers, such as Jiangyin Xicheng, Changzhou Zenith Steel, Jiangyin Xingcheng and Changzhou Dongfang Special Steel, in Jiangsu province also cut their purchase prices at the beginning of this week.
Yonggang Group in Jiangsu province chose to halt scrap purchases temporarily as it has sufficient supply, a company source said Wednesday.
Scrap traders with high inventories were under pressure to sell, even if at a loss, to raise cash to repay loans, a Shagang official told Platts. Since its last price cut, the mill has still been receiving 9,000-10,000 mt of scrap each day, it said.
"We are delivering around 1,000-2,000 mt of scrap per day to Shagang," a source from Fengli Group, China's largest scrap trader, told Platts Thursday. The company is also delivering around 5,000 mt of scrap each month to Magang in Anhui province.
"It's useless to sign long-term contracts with steelmakers in this sluggish market. They always adjust purchase prices frequently, squeezing our profit. The key point is the price," he added. The company is, however, not holding much inventory, he said, and this has helped it to weather the fall in prices.
Another trader in Jiangsu province was also avoiding the risks of high inventory.
"There are few transactions for us right now. It is also harder to collect scrap at low prices," the manager said. The company preferred to sell cargoes quickly, fearing a further price drop in the near future.
Some market sources expect scrap prices to fall further next week, but the fall would likely be within Yuan 50-100/mt.
A third trader in Anhui province said the company was offering heavy scrap over 6 mm at Yuan 2,200/mt ($358/mt) delivered to Fujian province, with VAT, after it had slashed both offer and purchase prices.
