Weekly: Chinese Steel Market Highlights

This week Chinese steel prices remained volatile amid bad weather conditions and mixed sentiments on the “two sessions”.

HRC export offers witnessed uptrend following gains in the domestic market. Rebar export offer remains unchanged amid higher gap between bids and offers. Coking coal price declined on lacklustre demand. Spot iron ore fines price hit a ten month high on supply concerns.

China spot iron ore fines price hit ten months high

Chinese spot iron ore prices witnessed at USD 94.6/MT towards the beginning of the week, increased to USD 100.9/MT, CFR China towards the weekend. The prices have picked up amid strong demand and Brazilian supply concerns.

Brazilian supplies of iron ore cargoes continued to remain affected amid rising COVID-19 cases at the iron ore mine in Itabira Brazil, owned by Vale, which may lead to operation suspension at the mine.

As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports dropped to 109.5 MnT, dropping off 0.5 MnT as against 110 MnT assessed a week ago.

Spot pellet premium up W-o-W-

Spot pellet premium for Fe 65% grade pellets assessed at USD 21.90/MT this week as against USD 20.15/MT last week. The prices have picked up due to the rising preference for low alumina pellet amid concerns from Brazilian low alumina supplies.

Spot lump premium rises-

Spot Lump premium witnessed at USD 0.1520/dmtu as compared to USD 0.1400/dmtu a week before. However, the preference for lump remains low due to approaching rainy season; this is due to the moisture of the lump is subjected to greater volatility which may create complications if it goes directly into blast furnaces. Also, there is a limited spread between pellet and lumps presently and with low steel margins, preference for a change in direct feed remains on the lower side.

Coking coal prices weighed down by slow demand-

Seaborne coking coal prices witnessed a downtrend on lower offers due to weak demand seen in the Asian spot market. The seaborne coking coal market saw ongoing negotiations in the premium hard coking coal segment, with sellers continuing to lower offers in order to attract demand from end-users.

However, many buyers have been reluctant to procure seaborne cargoes in light of stringent port-clearance policies in China.

India-based steel mills have relatively high inventory levels at the moment, as the country has been on lockdown since March 25.

Latest offers for the Premium HCC grade are assessed at around USD 108.00/MT FoB Australia which is USD 116/MT FoB basis.

Domestic billet prices up moderately-

The domestic billet prices in China stood at RMB 3,280/MT ex Tangshan (including VAT), up by RMB 10, against last week.

HRC export offers rise further-

HRC export offers were reported up by USD 5/MT on optimistic sentiments in the domestic market. Nation’s steel mills are enjoying a stable domestic demand from infrastructure and white goods sectors. Current week offer stands at USD 430-435/MT FoB China, which was USD 425-430/MT in the preceding week.

On the other hand, at the beginning of the week, a major Indian steelmaker has booked around 40,000 MT of HRC (SAE 1006, re-rolling grade) to China at USD 410-411/MT CFR basis.

Meanwhile, the domestic HRC prices were recorded at RMB 3,580-3,600/MT (Eastern China), up by RMB 20-30/MT as against RMB 3,560-3,570/MT (Eastern China) a week ago.

Rebar export offers stable on a weekly basis-

Nation’s rebar export offers continued to remain range-bound and stood at USD 445-455/MT FoB basis. However, the importers are bidding on the lower side.

On the other hand, the domestic prices fell by RMB 30/MT and stood at RMB 3,530-3,560/MT (Eastern China) as against RMB 3,560-3,590/MT (Eastern China). However, the fall in demand is due to the rainy weather in a few regions, which, in turn, resulted in a fall in prices.

Source: SteelMint Research