Chinese Steel Market Highlights – Week 9, 2019

This week Chinese steel prices have shown uptrend in domestic market along with hike in export offers.

Nation’s HRC export offers inch up over gains in domestic market.However rebar export offers remained steady. Coking coal offers remain range bound over weak trades from China. Meanwhile iron ore prices witnessed increase towards the weekend.

After enforcing tougher production constraints on steel mills’ operative sintering capacities this week, the Tangshan city in China has issued a level 1 smog alert, the highest in the country’s four-tier pollution warning system. This alert would be in place in Tangshan from 1 Mar to 6 Mar’19.

In level 1 (red) alert, steel mills are required to curb output by 40-70% or even stop production, depending on the scale of their emissions. In its last orders announced on 25 Feb – 2 Mar’19, mills had to observe production cuts of 40% as air over the city remained heavily polluted.

Chinese spot iron ore prices increase towards the weekend – Chinese spot iron ore prices opened up this week at USD 84.5/MT, CFR China and increased to USD 87.3/MT towards the weekend. The prices have picked up amidst better steel prospects. Iron ore inventory at major Chinese ports have increased to 146.05 MnT this week as against 145.05 MnT a week ago.

Spot lump premium witnessed stable for the W-o-W at USD 0.3350 /DMTU. The lump premium is supported due to expected stricter sintering controls.

Spot pellet premium increased by USD 1.60/MT this week – Spot pellet premium for Fe 65% grade pellets assessed at USD 42.10/DMT, CFR China this week, up against USD 40.50/DMT a week before.

The premiums have picked up amidst rising spot demand from non-Chinese markets post Vale mishap.

However,Chinese mills are running on low margins for finished steel rendering them to shift towards low grade ore.

Pellet inventory at Chinese ports increased to 4.6 MnT this wek compared to 4.4 Mnt towards last weekend.

Coking coal offers remain range bound – Seaborne premium-grade coking coal prices remain range bound this week amid weak buying from end users in China.This could be in light of the persistent uncertainties over port restrictions in North China.

Thus, premium HCC coking coal prices are heard around USD 211.7/MT FoB Australia. However towards the beginning of the week offers was around USD 212/MT FoB Australia.

Chinese domestic billet prices up- Domestic billet prices in China’s Tangshan for 150*150mm closed this week at RMB 3,570/MT (ex-works, including VAT) up by around RMB 60/MT W-o-W. Traders remained bullish amid seasonal peak time. Meanwhile billet export offers were assessed at USD 480/MT FoB China, however trades were not heard as there were competitive offers from other suppliers.

Chinese HRC export offers rose further-Chinese HRC export offers inch up further by USD 5-10/MT amid gains in domestic market.

Currently nation’s HRC export offers are assessed at around USD 520-525/MT FoB basis.Last week the offers was in range of USD 515-520/MT FoB basis.

Domestic prices in eastern China (Shanghai) up by RMB 20/MT W-o-W basis and are hovering at RMB 3,810-3,840/MT. Last week the price stood around RMB 3,760-3,790/MT.

However major steel mills may increase HRC export offers further over recovery in demand in domestic and export market.

Chinese re-bar export offers remain stable- Nation’s re-bar export offers remain stable this week over increase in inevntory levels in domestic market.

Currently,nation’s rebar export offers are at USD 515-520/MT FoB China.Last week the offers was in similiar range.

Meanwhile major mills are offering rebar on higher side which is around USD 530-535/MT FoB basis.

However on weekly basis Domestic rebar prices moved up by RMB 40-50/MT and is assessed at RMB 3,740-3,790/MT in (Eastern China).Towards the end of last week the prices stood at RMB 3,700-3,740/MT.

Chinese steel market Highlights Week 9,2019

Source- SteelMint Research