China’s largest ferrous scrap trader halts ‘unprofitable’ trading: source


Fengli Group, China’s largest ferrous scrap supplier, based in Zhangjiagang the eastern province of Jiangsu, has suspended both sales and collections of scrap as the business was no longer profitable in the current market, a company source said Friday.

“I have nothing to do this week as we have stopped supplying scrap to Shagang, and suspended scrap buying from the market as well,” the source said. He did not say when they would resume scrap buying and selling.

“Scrap prices are unlikely to recover before the rebar market improves, and we will wait and see whether the steel market is going to rally in the ‘golden September’,” the source said. Demand in downstream steel sectors often recovers in September as the weather cools and construction projects restart.

Fengli Group’s woes have been echoed by other traders in eastern China who have described the scrap business this year as ” difficult,” with a trader in Jiangsu province’s Xuzhou city also stopping its scrap business in May, sources said.

The cost of producing hot metal from iron ore and coke in eastern China is currently around Yuan 2,100/mt ($341/mt), market participants say. Platts assessed heavy melting scrap (6 mm thick and above) in eastern China Yuan 20 lower this week at Yuan 2,160/mt including value-added tax, delivered to Zhangjiagang, Jiangsu province, the fourth week in a row that prices have fallen.

Despite this fall, scrap remains more expensive than hot metal with one trader in Anhui province saying that the scrap price could fall by another Yuan 50-60/mt. Many mills have slashed scrap consumption in response to the cheaper iron ore this year, and the same Anhui-based trader said he was bearish about future scrap prices.

Shagang, the largest scrap consumer in east China, announced Tuesday it was cutting scrap 6 mm thick and above HMS purchase prices by Yuan 20 to Yuan 2,160/mt delivered including VAT, the fourth week in a row that it has cut its official purchase price.

Many other mills in eastern China have followed suit, with a Jiangsu based mill also cutting its scrap purchase price by Yuan 20/mt as it has no need to purchase scrap this week, due to the fact that the company has halted operations of one of its electric arc furnaces recently due to problems with its power supply. The mill said it expected the EAF to be back in operation next week.

Source from : Platts