Weekly: Chinese Steel Market Highlights

This week Chinese HRC and rebar export offers remained largely stable on weak buying interest from overseas buyers. Spot iron ore prices inched up against last week’s close. Billet prices marched up on a weekly premise. However, ample supplies keep weighing on coking coal prices.

–There were some indications on steel production cut announcement of upto 50% in Tangshan region to improve air quality ahead of the annual meeting of National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC), to be scheduled towards the end of April or early May

— As per the National Bureau of Statistics( NBS), the nation’s aggregated crude steel output stood at 234 MnT in Q1 CY ’20, up by 1.2% in comparison to Q1 CY’19.

—Finished steel export volumes plunged by 16% in (Jan-Mar) and stood at 14.29 MnT in Q1 CY ’20. Meanwhile, the nation’s Iron ore imports moved up marginally by 1.3% in Q1 CY’20 to 262.7 MnT.

Spot iron ore fines prices inched up against last week’s close
–Nation’s spot iron ore prices opened up this week at USD 85.2/MT, CFR China, increased to USD 86.1/MT, CFR basis during the week and fell to USD 84.5/MT, CFR basis towards the weekend. However on weekly comparison basis, prices have marginally increased.

— As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports dropped to 118.55 MnT as against 119.05 MnT assessed a week ago.

Spot pellet premium down a weekly basis
— Spot pellet premium for Fe 65% grade pellets assessed at USD 24.7/MT, CFR China as against USD 28.15/MT, CFR basis last week. The domestic pellet is being considered a possibly less expensive direct feed by end-users.

–The fall was apparently due to increasing supply in the Chinese market. Meanwhile, lower steel margins accompanied by the end-users pushed them to prefer for a cost-effective feed.

— Pellet inventory for the week at major Chinese ports increased to 4.1 MnT against 4 MnT a week ago.

Spot lump premium moved down on the expected increase in supply
–– Spot lump premium was seen at 0.2285/dmtu, down, during the week. The lump premium fell this week amid concerns over cost-cutting and expectations of increased supply due to ex-China end-user reselling activities.

Coking coal prices moved down further on ample supply
— Seaborne coking coal prices moved down further this week owing to ample supply in China and muted demand in the overseas market.

— In India too, the demand for coking coal has remained subdued since the enforcement of the 21-day nationwide lockdown effective from March 25 has been extended till 3rd May. Thus importers have reportedly sought deferments on the loading of cargoes as well as cancellation of orders.

— The Latest offers for the Premium HCC grade have been reported to be around USD 132/MT FoB Australia, which was USD 134/MT FoB basis in the previous week.

Domestic billet price increases the weekly basis
— The domestic billet prices in China are at RMB 3,070/MT ex Tangshan (including VAT) marginally up by RMB 60 against last week. Meanwhile, billet import prices in China are currently at USD 370-372/MT, CFR.

 HRC export offers remained stable on thin trading
 — The nation’s HRC export offers remained largely stable this week due to fewer trade inquiries owing to lockdown announced across the globe to prevent COVID-19. The current HRC export offers are reported at USD 405-410/MT FoB China basis

— Further, the domestic prices reported an increase after the announcement was made in the nation’s steelmaking hub in the northern region to cut steel output almost halves to their current operating rates. Current domestic HRC prices increased by RMB 60/MT at RMB 3,330-3,340/MT (Eastern China), which was RMB 3,270-3,280/MT (Eastern China) a week ago.

Rebar export offers a stable weekly basis
— The rebar export offers remain consistent at USD 435-445/MT FoB China basis as traders shifted their interest on the domestic market amid better profit margins. Meanwhile, the nation’s export offers failed to attract importers due to higher prices.

— However, the domestic prices moved up by RMB 50/MT to RMB 3,450-3,480/MT (Eastern China) compared with RMB 3,400-3,430/MT (Eastern China) in the previous week

Source- SteelMint Research