Chinese Steel Market Highlights- Week 3, 2020

The Chinese domestic steel market prices remained volatile this week amid more and more trade participants withdrawing from the market ahead of the Chinese New Year holidays starting 24th Jan’20.

However, the increase in Rebar and HRC export offers were augmented by the recent appreciation of RMB against the USD. Spot iron ore prices also inched up. Supply constraints led to an increase in Spot pellet premiums. The increment in Coking coal price was supported by the firm bids from the Asian market.

China crude steel output sets yet another benchmark with 996.35 MnT in (Jan-Dec) CY’19, surpassing the previous high by 7%, which was 927.52 MT in CY’18. Also, on a monthly premise, the same rose by 5% to 84.27 MnT in Dec’19 over 80.29 MnT in Nov’19.

Enduring the stricter measures to prevent emissions and improve air quality, the nation’s steel output bounced on the back of improved buying in the domestic market.

China’s iron ore imports in CY’19 recorded at 1069 MnT as against 1,064 MnT in the previous year.

Iron ore and pellet imports hit 2 years high to 101.3 MnT in Dec’19, witnessed a sharp hike of 12% on a monthly premise compared to 90.65 MnT in Nov’19 amid strong restocking demand ahead of the New Year holidays, and recovery in shipments from big miners.

The nation’s finished steel exports declined by 7% to 64.29 MnT in CY’19 in comparison with 69.34 MnT in CY’18. Better realizations in the domestic market, along with frequent production curbs and the USA-China trade spat, were few reasons attributed to the decline.

Nation’s aggregated finished steel import volume in (Jan-Dec) CY’19 stood at 12.304 MnT, tumbled by 7% as against 13.166 MnT in CY’18.

Spot iron ore prices up during the week- Chinese spot iron ore prices opened up this week at USD 94.5/MT, CFR China, and increased to USD 95.75/MT CFR China towards the weekend. However, restocking ahead of Lunar New Year is expected to have finished by mid of next week.

As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports decreased to 127.35 MnT as against 127.9 MnT assessed towards the end of last week.

Spot pellet premium Up 9% amid supply constraints- Spot pellet premium for Fe 65% grade pellets increased to USD 29.90/MT CFR China as against USD 27.45/MT CFR China assessed last week. The prices improved amid tight material supply amid ongoing sintering controls. Pellet inventory witnessed fall W-o-W to 4.3 MnT against 4.6 MnT a week ago.

Sport lump premium inched down on a weekly premise- Spot Lump premium for the week has witnessed a slight fall to USD 0.2600/dmtu as against USD 0.2645/dmtu in the last week. Few traders depicted interest for Feb cargoes co-loaded with fines and lumps.

Coking coal offer inch up- Seaborne coking coal offer witnessed a slight increase this week. Meanwhile, the market participants in China are gradually winding up activities ahead of the New Year holidays.

The latest offers for the Premium HCC grade assessed at around USD 152.50/MT FoB Australia, which was USD 148.00/MT FoB basis a week ago.

Chinese domestic billet prices down W-o-W- Chinese domestic billet market was settled at RMB 3,300/MT, down RMB 30 against last week. The market sentiments in the country were reported weak amid the upcoming New Year holidays.

Chinese HRC exports offer rise W-o-W- Chinese HRC export offers moved up by USD 5/MT this week as the Chinese steel mills have slated decent order quantity in their books and are not in a hurry to export. Also, the realizations in the domestic market remain decent in comparison with the overseas market.

Thus, the current HRC export offers stand at USD 500-505/MT FoB China as compared with USD 495-500/MT FoB basis a week ago.

However, prices in the domestic market witnessed a slight deceleration of RMB 10-20/MT to RMB 3,860-3,880/MT (Eastern China) as against RMB 3,870-3,900/MT in the previous week.

Chinese Rebar export offers moved up amid recent appreciation of RMB- Chinese steel mills raised their Rebar export offers by USD 7-10 amid the recent appreciation of RMB against the USD. Also, the mills were not in a rush to sell in the overseas market as the domestic market demand in the Feb and Mar months remain typically firm, were other reasons attributed to the rise.

Hence, the current Rebar export offers assessed at USD 470-475/MT FoB China, which was USD 460-468/MT in the previous week.

Meanwhile, the domestic market prices declined by RMB 30/MT to RMB 3,640-3,670/MT as compared to RMB 3,670-3,700/MT a week ago.

Source: SteelMint Research