Weekly: Chinese steel market highlights

The nation’s steel market exhibited mixed sentiments amid fluctuating futures market. Meanwhile, HRC and rebar export offers moved up during the week. Iron ore prices picked up towards the weekend. Coking coal prices remained range-bound on low demand.

China spot iron ore prices rebound towards the weekend-

Chinese spot iron ore prices depicted a sharp rise to $106.55/t, CFR China towards the beginning of the week against last weekend price at $99.2/t.The prices picked up on continued supply concerns from Brazil due to closure at Vale’s Itabira complex. However, during the week prices dropped to $103.85/t and later rose to $105.35/t.

Brazilian miner Vale has obtained a preliminary license to expand its Serra Lesta iron ore mine in northern Para state, with final approval expected within three months. The project involves expanding production capacity from 6mnt per year to 10mnt per year.

As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports dropped to 107.75 mnt as against 108.5 MnT assessed a week ago.

China’s iron ore import declined by 9% in May’20 to 87.03 mnt as compared with 95.71 mnt in the previous month.

Spot pellet premium down on increased iron ore preference- Fe 65% grade pellet premium assessed at $16.60/t as compared to $16.85/t last week. The same witnessed drop amid falling pellet demand due to rising iron ore preference accompanied by rising pellet inventories at major Chinese ports. As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports increased to 6.9 mnt as against 6.6 mnt assessed a week ago.

Spot Lump premium weakens this week- Recorded at $0.1310/dmtu this week as against $ 0.1520/dmtu last week, falling on a weekly basis. Lack of stringent environmental regulations and comparatively inexpensive domestic concentrates resulted in a fall in lump demand.

Domestic billet prices range-bound- Chinese domestic billet prices stood at RMB 3,320/MT ex Tangshan (including VAT), slightly down RMB 10, against last week.

Coking coal prices remain range-bound- Seaborne coking coal (HCC) prices remained largely stable this week with Asian spot buyers adopting a wait and watch mode.

However, some buying interest was observed in China, although the Chinese market sources expect prices to fall till end-June due to stringent import restrictions in place.

Indian spot demand for seaborne coking coal continues to remain subdued despite a gradual resumption of crude steel production in line with unlocking announced 1.0 in the domestic market.

The latest offers for the Premium HCC grade are assessed at around $ 109.00/t FoB Australia, which was a $ 108.8/t FoB basis in the previous week.

HRC export offer rises on domestic gains-

The mills focused on the domestic market amid higher margins which in turn resulted in an increase in HRC export offers by $10/t. Thus the current week price stands at $ 435-445/t as compared to $ 430-435/t in the preceding week.

Meanwhile, the domestic HRC prices increased by RMB 30-50/t to RMB 3,650-3,660/t (Eastern China) as against RMB 3,600-3,630/t (Eastern China) a week ago.

Baosteel announced an increase in its HRC price by RMB 280/t, heavy plates by RMB 150/t, and hot-dipped galvanized steel by RMB 260/t for July deliveries.

The increase in future market gains on the back of concerns over iron ore supply from Brazilian miner Vale’s Itabira complex on rising COVID-19 case is being attributed to the price increase.

Finished steel exports witnessed a significant fall by 30% to 4.40mnt in May’20 as compared to 6.31mnt in Apr’20. On the other hand, finished steel imports stood at 1.29 mnt, increasing by 39% in contrast with 0.92mnt in the preceding month.

Rebar export offers rise – The nation’s rebar export offers were up by $ 10-12/t on the week. However, bids from importing nations were lower amid cheaper alternatives available from other nations. The current week Rebar export offer stood at $460-470/t FoB China when compared with $ 450-458/t a week ago.

On the other hand, domestic prices softened by RMB 20/t and stood at RMB 3,580-3,610/t (Eastern China) as compared to RMB 3,600-3,630/t (Eastern China) in the previous week. Bad weather conditions due to heavy rains during the week resulted in slow activity in construction and infrastructure structure, which weighed on the prices towards the end of the week.

Source: SteelMint Research