Steel Scrap Consumption of Chinese Shagang Group To Plunge Up By 13 % in 2013

JIANGSU (Scrap Monster) : Privately owned Shagang Group, China's biggest steel scrap consumer, expects to utilize 5.5 million mt of scrap this year -- or about 15,000 mt/day -- an increase of 500,000-800,000 mt, or about 13%, from last year, a company source said this week. The increase was due to the startup of an electric arc furnace at the end of November last year, the source said without providing further details.

Shagang, based in China's eastern Jiangsu province -- the biggest scrap consuming province -- will produce at least 1.5 million mt of the scrap itself this year, while the rest will be procured mostly via contracts, the source said. The company's scrap inventory currently stands at around 300,000 mt, which is sufficient for production throughout winter, the source said.

The company typically stocks up an additional month's worth of scrap in December to ensure sufficient material when scrap collection rates decline as the weather gets colder, but it will not be doing that this year due to the current weak market conditions, she said.

"The contracted volume between Fengli [China's largest scrap dealer] and us totaled 800,000 mt this year, but 100,000 mt hasn't been delivered so far," the source said.

Nevertheless, the company plans to continue to purchase just its usual 7,000-8,000 mt/d of scrap for normal operations, on top of at least the 2,000 mt it produces from its own operations, she said, adding that the company's daily scrap purchase volume hit a 2013 high of 12,000 mt earlier this year.

Courtesy : Platts