Weekly: Chinese Steel Market Highlights

The Chinese steel market continues to suffer amid the Coronavirus outbreak in Wuhan since 24 Jan’20. The nation’s government announced an extension of the Lunar New Year holidays twice and extended it until 9 Feb’20 to contain the virus spread.

Meanwhile, the domestic HRC and Rebar prices witnessed a plunge as market participants resumed slowly after 3rd Feb’20. However, the billet prices remain stable for the last two consecutive weeks.

In similar lines, the nation’s HRC and rebar exports offer softened on limited market activities and logistical constraints. Spot iron ore prices inched up over tight supplies amid concerns over the strengthening of the cyclone Damien. Spot pellet premiums increased amid tight supplies over sintering controls.

Spot iron ore prices picked up during the week- Chinese spot iron ore prices opened up this week at USD 79.80/MT CFR China and increased to USD 82.65/MT CFR China towards the weekend.

The prices picked amid supply tightness as the tropical cyclone Damien strengthened off the north of West Australia’s coast, which lead to closure at port Hedland and port Dampier on Friday (7th Feb’20). Also, logistics remain affected in China amid the outbreak of Coronavirus which is, in turn, pushing up the prices amid low margins.

As per data compiled by Steel Home consultancy, Iron ore inventory at major Chinese ports recorded at 131.1 MnT as of 6th Feb’20 as against 127.05 MnT assessed towards the end of Jan. The inventory picked up amid low discharge rate due to extended Lunar New Year Holidays.

Spot pellet premium increased amid tight supplies- Spot pellet premium for Fe 65% grade pellets assessed at USD 40/MT, CFR China up by USD 1/MT W-o-W. The prices improved amid tight material supply caused due to ongoing sintering controls.

Pellet inventory at major ports increased to 4.6 MnT as on 6th Feb, up against 4.1 MnT assessed last week.

Spot lump premium rises W-o-W- Spot lump premium for the weekend stood at USD 0.2655/dmtu, up during the week against USD 0.2550/dmtu towards the beginning of the week. Few traders depicted interest for Feb cargoes co-loaded with fines and lumps. As per sources, the lump premium may face downward pressure ahead in Feb on expectations of looser sintering controls.

Coking Coal offers inch down W-o-W basis- The seaborne coking coal prices witnessed a marginal correction in China amid a slowdown in trading activities post the Lunar New Year holidays.

However, the Australian export shipments were disrupted amid a network outage hindering the logistic services in Queensland’s Dalrymple Bay Coal Terminal (DBCT) from neighboring coal mines.

The latest offers for the Premium HCC grade assessed at around USD 151.00/MT Fob Australia, which was USD 153/MT Fob basis a week ago.

Chinese domestic billet prices stable amid slow activities- The delay in the resumption of activities kept the domestic billet prices firm this week. Thus, domestic billet prices continue to hover at RMB 3,300/MT consistent for two consecutive weeks.

China HRC export offers tumble over limited market activities- This week, the Chinese HRC export offers softened by USD 10/MT on the back of weak market sentiments post the New Year holidays owing to the Coronavirus outbreak.

Thus, the current week HRC export offer stands at USD 490-495/MT FoB China, which was USD 500-503/MT FoB basis in the previous week.

Meanwhile, the domestic HRC prices went down by RMB 90-100/MT to RMB 3,540-3,550/MT in contrast with RMB 3,630-3,650/MT after the partial resumption of market activities on 3 Feb’20.

The logistical constraints, along with the delay in the resumption of activities by market participants to avoid any further spread of disease kept the market activities subdued.

China Rebar export offers fall on slow demand- The Chinese rebar export offers fell by USD 10-15/MT on a weekly premise owing to the dull trades and low buying activities amid delay in the resumption of construction activities over extended holidays.

Thus, the current week Rebar exports offer remains at USD 455-465/MT FoB China when compared with USD 470-475/MT FoB basis in the preceding week.

Meanwhile, the domestic Rebar prices fell by RMB 40-50/MT to RMB 3,360-3,400/MT as compared with RMB 3,400-3,450/MT at the beginning of the week.

Source: SteelMint Research