Domestic steel prices gained momentum this week on strong futures market performance. Export offers of HRC and rebar increased on a weekly basis. Iron ore prices continued to rise on supply concerns. However, coking coal offers fell. Heavy rains and floods for the second consecutive week may result in market sentiments softening in the near-term.
China’s crude iron ore production and crude steel production was higher by 2% at 413.95 mn t and 502.8mn t in H1CY20 respectively, according to the National Bureau of Statistics.
China’s finished steel exports were down by 16.5% y-o-y at 28.7 mn t and finished steel imports were up by 12% y-o-y in H1CY’20. Meanwhile, iron ore imports gained by about 9% in H1CY20.
China spot iron ore price picked up during the week- Chinese spot iron ore prices opened at $111.85/t this week, much stronger than the preceding week’s close of $105.09/t, but closed at $110.45 on Friday. Prices gained on concerns about August supply amid maintenance going on at several iron-ore loading ports in July.
Iron ore prices were range-bound amid positive demand outlook, with construction works expected to pick up pace as rains cease in southern China.
As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports increased to 112mn t compared with 110.05 mn t assessed a week ago.
Spot pellet premium up W-o-W- Spot pellet premium for Fe 65% grade pellets were assessed at $ 10.75/t to the 62pc index from a premium of $ 10.25/t last week. Higher domestic pellet demand in India may support prices in the long term.
However, the rising port inventory of pellet stocks and competitively-priced lump cargoes may limit pellet demand.
As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports increased to 9.1 mn t against 8.7 mn t assessed a week ago.
Spot lump premium reduced to entice buyers- Spot lump premium was at $ 0.660/dmtu premium to the 62pc index, down by $ 0.1130/dmtu from last week’s assessment. The narrowing spread between fines and the lump has increased buying interest for lump. Also, a further drop in the lump prices could entice end-users to replace sintering fines with the lump.
Coking coal price fell on a weekly basis- Seaborne coking coal prices fell this week despite buyers in China actively seeking cargoes. Customs restrictions continue to remain stringent for importing coking coal cargoes.
Meanwhile, Indian buyers are still largely holding off on spot buying of imported coking coal, but mills are keeping an eye on falling coking coal prices, according to traders. The spot demand is expected to rise in the fourth quarter after the monsoon season ends in September.
The latest offers for the Premium HCC grade are assessed at around $107.00/t FoB Australia, as against $115.25/t FoB basis a week ago.
Domestic billet price up by 20/t w-o-w- This week, Chinese domestic billet prices closed with a rise of RMB 20. Prices of commonly traded Q235 billet of 150mm diameter were reported at RMB 3,410/t ($487/t) against RMB 3,390/t in Tangshan, including 13 % VAT.
HRC export offer rises further following gains in the domestic market- Chinese manufacturers increased their offers by around $10-15/t backed by the futures market while the demand remains decent with better gains in the domestic market.
Currently, export offers were around $465-470/t CFR China, which was $450-460/t a week ago. However major steel mills are offering HRC at around $485/t.
Domestic HRC prices also rose by RMB 20-30/t to RMB 3,870-3,900/t compared with RMB 3,850-3,870/t in the preceding week.
Rebar export offer rises further as domestic market strengthens- China’s steel producers further raised their rebar export offers by $5-7/t as the domestic market strengthened after the consistent rainfall and consequent floods in various regions.
However, importers showed low buying interest for Chinese rebar amid competitive offers from other exporting countries.
Rebar export offers were at $462-470/t FoB China, which was $455-465/t a week ago.
Domestic prices also increased by RMB 10/t to RMB 3,560-3,590/t compared with RMB 3,570-3,590/t in the previous week.
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