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.
OTHER EAST CHINA PRODUCERS REPORT MIXED SCRAP USAGE
Meanwhile, state-owned Nanjing Iron & Steel, or Nangang, which is also based in Jiangsu province, expects its steel scrap consumption to be 20,000 mt less than last year, a company source said this week, declining to provide absolute figures.
The company has enough inventory to last for 25 days of consumption, the source said, adding that it has no plans to restock for the winter due to low finished steel prices.
In another eastern province, Zhejiang, major steelmaker Hangzhou Iron & Steel expects to consume 600,000 mt of steel scrap this year, a company source said.
He said this year's consumption level would be higher than last year, but added that this as due to a blast furnace turnaround in 2012.
State-owned Hanggang's daily scrap inventory has averaged 34,000-35,000 mt this year, but the company will likely do some winter restocking and the inventory level is expected to increase to 50,000 mt by the end of this year, the source said.
Meanwhile, privately owned longs and flats producer Xicheng Steel, which is based in Jiangyin city in Jiangsu province, expects its scrap consumption this year to reach 2.3 million mt, higher than last year's 1.8-1.9 million mt, a company source said.
At present, the company's scrap inventory is more than 100,000 mt and the mill is still buying over 7,000 mt/d, compared with normal purchasing volumes of 2,000-3,000 mt/d in previous months.
"It is not for winter stock. I'm bullish on the future price [of scrap]," he said, adding that while the company's purchasing price currently is slightly higher than before, the company is expecting prices to rise further.
According to the China Association of Metalscrap Utilization, the country's annual scrap consumption fell 12.3% year on year to 79.8 million mt in 2012.
