Chinese Ferrous scrap trader halts business as profit slides drastically

BEIJING (Scrap Monster): Jiangsu province-based Fengli Group has halted sale and collection of scrap for the week citing weak demand and low prices. According to sources, the company has stopped supplying scrap to Shaganag and also halted fresh purchases from market, saying that the operations are no longer profitable in current market situation. Fengli Group is China’s largest ferrous scrap supplier.

The company hopes that the scrap prices may recuperate with improvement in rebar market. The steel demand in the country is expected to improve during the month of September as construction activities gear up.

According to traders, scrap business has been difficult throughout this year. Many see the tense situation top prolong till year end. Despite the sharp fall in scrap prices, traders indicate that scrap prices are still higher than cheaper iron ore.

Many major steel mills have reduced scrap purchase prices significantly. Shagang Group had reduced the scrap prices of HMS 6mm thickness and above by Yuan 20 per MT. It is the fourth consecutive week that the group has cut the scrap buying price.

The scrap prices are feared to face further fall of Yuan 50-60 per MT, as per industry participants. The traders are seen maintaining their bearish view on scrap prices in the near future.