Chinese Steel Market Highlights- Week 46, 2019

This week Chinese steel prices gained momentum over recently announced production curbs. Meanwhile, the nation’s HRC & Rebar export offer increases amid weakening dollar. Spot iron ore prices rose amid falling inventories in major ports. Coking coal offers inched up over improved trades.

China’s major steelmaker Baosteel kept its HRC, plain carbon CR coil, and HDGI prices largely unchanged for Dec deliveries.

Eastern China’s largest private ferrous scrap consumer and EAF steelmaker- Shagang Jiangsu Steel group announced another price cut for all grades of domestic steel scrap procurement, by RMB 30/MT (USD 4) effective from 13th Nov’19. This comes as the 2nd price cut in 3 days, just days after a sharp price hike was observed last week, as the market remains quite volatile.

As per updates, Shagang Steel is paying RMB 2,710/MT (USD 386) inclusive of 13% VAT for HMS (6-10 mm thickness) delivered to headquarters works situated in Zhangjiagang.

According to the NBS, China’s crude iron ore production inched up by 1% to 78.05 MnT in Oct’19, and the nation’s crude steel output hits seven months low at 81.52 MnT in Oct’19.

Chinese spot iron ore prices up 8% during the week- Chinese spot iron ore prices opened up this week at USD 78.45/MT, CFR China and increased to USD 84.75/MT, CFR China towards the weekend.

The prices were supported due to falling inventories at major Chinese ports. As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports dropped to 130.35 MnT as against 131.75 MnT assessed towards the end of last week.

The largest iron ore miner- Vale during the week slashed iron ore and pellet sales guidance for the year to 307-312 MnT, supporting global price hike.

Spot pellet premium up by around USD 3/MT for the week- Spot pellet premium for Fe 65% grade pellets assessed at USD 27.05/MT, CFR China as against USD 24.15/MT, CFR China assessed last week. The approaching winter production curbs are pushing up the pellet demand.

Spot lump premium increased W-o-W- Spot lump premium this week moved up to USD 0.2145/DMTU as compared to USD 0.2000/DMTU towards last week. Amid sintering cuts, the demand for lumps remain supported. However, a further increase in lump premiums may inhibit lump usage in the blast furnace.

Coking coal prices inch up W-o-W- Seaborne coking coal prices have increased slightly this week amid improved market sentiments. However, buyers from China resist purchasing coking coal from Australia amid concerns over stringent restrictions imposed at several major ports across China.

However, producers are waiting for a possible improvement in prices before they start to sell their late-December cargoes.

The latest offers for the Premium HCC grade are assessed at around USD 136/MT FoB Australia  which was USD 134/MT FoB basis in the previous week.

Domestic billet prices move up on a weekly basis- The Chinese domestic billet market settled at RMB 3,390/MT, up by RMB 60/MT against last week. The market sentiments in the country remain bullish. As per marketers, production curbs in China backed by restrictions on scrap imports in the country are expected to drive the billet imports to the country.

Chinese HRC export offers move up over gains in domestic market- This week, Chinese HRC export offers strengthened by USD 5/MT on the back of improved bids from Vietnameses buyers coupled with announced production curbs following uptrend in domestic prices.

Nation’s HRC export offers stand at USD 440-445/MT FoB China, which was USD 435-440/MT FoB basis in the previous week.

However, higher export offers lead to sparse trading in overseas markets as buyers based in Vietnam can easily book material from India and Russia over cost effective imports.

In the current week, HRC prices in the domestic market ascended by RMB 60-70/MT and stood at MB 3,590-3,600/MT, in contrast with RMB 3,520-3,540/MT in the previous week.

Announcement of production curbs in the Yangtze River delta, to reduce the PM2.5 levels by 2% Y-o-Y which has started from 1st Oct’19 till 31st Mar’20. Thus, 35 mills in the Jiangsu region require to complete the modifications in their steelmaking equipment by Dec’19, to meet the ultra-low emission goals. Also, Shanxi province is carrying out modifications aimed to complete it by Dec’19.

China Rebar export offers up on a weekly basis- This week, the nation’s Rebar export offers moved up by USD 5/MT W-o-W basis. However, overseas buyers adopted a wait and watch mode and remain cautious amid volatility in prices.

Thus, currently, the nation’s rebar export offers stand around USD 455-460/MT FoB basis as compared with USD 450-455/MT FoB basis in the previous week.

Meanwhile, domestic rebar prices spiked by RMB 160/MT and stood at RMB 3,860-3,900/MT in contrast with RMB 3,700-3,740/MT in the previous week.

However, few rebar traders are planning to shut their operation in December owing to sparse trading in winter season ahead of upcoming New year holidays.

Source: SteelMint Research