In addition to the 1.5Mt of scrap it will produce itself, Shagang Group, a privately-owned Chinese steelmaker, claims it will use a total of 5.5Mt of scrap this year following the start-up of an electric arc furnace in November 2012.

Shagang is located in Jiangsu province in the east of China, a region famed for being the country’s biggest consumer of scrap. The scrap the company doesn’t produce itself will be sourced predominantly through contracts.

At present, Shagang holds around 300kt of scrap, which will see it through the winter, and has already bought 800kt from Fengli, China’s biggest scrap dealer, although it claims it has yet to receive 100kt of that amount.

On a daily basis, Shagang buys between 7kt and 8kt of scrap and produces around 2kt/day from its own operations. Earlier this year, Shagang’s daily scrap purchase volume soared to 12kt.

Other Chinese steel companies operating in eastern Chinese provinces offer mixed reports with Nangang (Nanjing Iron & Steel) reporting its scrap consumption down 20kt over 2012 figures and Hangzhou Iron and Steel claiming it will consume 600kt this year, a higher figure than last year due to a blast furnace turnaround in 2012.

Another steelmaker, state-owned Hanggang, claims it’s scrap inventory levels will rise to 50kt by the year end.

Xicheng Steel, a privately owned producer of longs and flats, expects scrap consumption to rise from 1.8 to 1.9Mt last year to 2.3Mt. The company has a 100kt scrap inventory and is currently buying 7kt/day compared to its usual 2-3kt.

Looking at China overall, annual scrap consumption was down 12.3% (2012).

Source: Platts.