The nation’s steel prices exhibited volatility during the week amid fluctuations in the futures market. However, Chinese New Year holidays scheduled from 11th Feb has a dampening effect on market sentiments.
Feed materials like coking coal along with spot pellet premiums, spot lump premiums and billet prices witnessed an increase during the week.
Chinese steel market highlights-
China’s spot iron ore price dropped during the week- Chinese spot iron ore prices opened at $168.5/ t this week but slipped to $158.05 towards the weekend. Iron ore prices dropped on lower steel margins. Mid-week the prices had fallen to $156.20/t but picked towards the weekend due to forecasts of a tropical cyclone in Western Australia. Most mills have finished up with restocking ahead of New Year holidays.
As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports was at 126.2 mn t against 125.5 mn t assessed a week ago.
Spot pellet premium up w-o-w-Spot pellet premium for Fe 65% grade pellets was at $52.95/t, up against last week prices at $ 51.25/t. The prices for pellets surged on the back of tight supply. China is increasing demand for pellets, due to the higher-grade iron content and environmental benefits from pellets, compared with sintered iron ore fines which use carbon fuels such as coke breeze and anthracite.
As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports dropped to 5.7 mn t this week as against 5.9 mn t assessed a week ago.
Spot Lump premium moves up on increased preference- Spot Lump premium was witnessed at $ 0.3825/dmtu against $ 0.3700/dmtu last week. Lump demand has surged aggressively on sintering restrictions in Tangshan.
Coking coal increases sharply-Seaborne coking coal prices have continued to gain sharply this week following spot transactions concluded at higher levels and higher firm bids from importers.
Two trades for 75,000 t each of PLV HCC cargoes were concluded on 27 Jan’21, at $155/t and $154/t FoB Australia, with early-mid March delivery.
Another spot deal for 75,000 t with early-March delivery was concluded on 26 Jan’21 at $151/t FoB Australia.
Rising restocking demand and buyers’ concern over potential supply disruptions during Australia’s cyclone season are key factors behind the recent rally in prices. Further, the competitively priced Australian cargoes relative to Atlantic coals of similar grades are also supporting prices.
The latest price for the Premium HCC grade is assessed at around $160.50/t FoB Australia in contrast with $135.50/t FoB basis a week ago.
Domestic billet prices up w-o-w- This week, billet prices in the Tangshan market (Northeast China) settled with a rise of RMB 50, against last week. The prices of commonly traded Q235 billet 150mm diameter were reported at RMB 3,860/t ($600/t) in Tangshan, including 13 % VAT.
HRC export offer range expands over the week- Chinese HRC export offer started to decline with the commencement of this week due to bearish domestic market sentiments. However, the offers witnessed a rebound towards the end of the current week.
HRC export offers stood at $630-650/t FoB China compared to $630-640/t FoB basis a week back.
Multiple factors have had their impact on the price direction-
- China’s Chamber of commerce for Metallurgical Enterprises relayed its concerns over Iron Ore Futures market speculation and might roll out a plea to the Beijing Government to reduce export rebate putting a leash on production volumes.
- Ministry of Industry and Information Technology (MIIT) in a bid to reduce carbon emissions might forbid an increase in steel capacity while encouraging mergers and acquisitions.
Domestic market prices for the week were pulled down by RMB 20/t w-o-w to RMB 4,440-4,460/t (Eastern China) as against RMB 4,460-4,480/t (Eastern China) a week ago.
Rebar export offer moves down slightly- Chinese exporters have cut their offers to $630-640/t FoB China against $635-645/t FoB basis in the preceding week.
A dip in domestic market demand motivated mills to shift focus to overseas markets. On the other hand, importers were heard bidding on the lower side at $610-620/t FoB China, resulting in mute trades.
The domestic market prices were reported at RMB 4,110-4,160/t (Northern China), up by RMB 50/t against RMB 4,060-4,160/t (Northern China) in the previous week. Domestic market prices gained support from the uptrend in futures market on the fact that MIIT announced measures to cut output coupled with the mills reducing production volumes to cut down their losses due to higher input costs.
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