This week Chinese steel market prices increased due to volatility in the futures market. Also, possible rebate cuts and the announcement of production curbs kept the market sentiments bullish.
Major highlights are mentioned below-
- Finished steel export volumes jumped by 30% at 10.14 mn t in Jan-Feb’21.
- Imports of iron ore (including pellets) stood at 181.5 mn t in Jan-Feb’21, up by 3% cply.
- China’s leading steelmaker- Baosteel has increased HRC prices by RMB 300/t for Apr ’21 delivery.
Product-wise market sentiments are given below;
1. China spot iron ore prices down w-o-w- Chinese spot iron ore prices opened at $174.15/t and dropped drastically to $163.6/t, CNF China mid-week on bearish sentiments following the implementation sintering and production cuts in North China.
Iron ore procurement in Tangshan slowed down significantly due to the strict implementation of environmental controls on truck deliveries and sintering operations on March 9. A notice released by the Tangshan government on March 7 said: “The city will initiate Level II emergency response to heavy pollution weather at 4 pm on March 7 and the release time will be notified later.”
However, prices picked up to $165.7/t towards the weekend. Low-grade fines saw continued healthy buying interest. Few sources expected such firm demand of low-grade fines to continue, as coke prices were seen declining further, allowing more room for impurities in iron ore.
As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports was recorded at 130.9 mn t as against at 129.5 mn t assessed a week ago.
Spot pellet premium up w-o-w- Spot pellet premium for Fe 65% grade pellets was assessed at $52.15/t up by $1.1/t. Seaborne iron ore pellet premiums inched up on continued demand amid rising prices for iron ore fines. Steelmakers are likely to increase their utilization of pellets given their attractive value-in-use in comparison to sinter feed. Spot buying interest was heard to have extended to certain low alumina Indian pellet cargoes, which are viewed as a low-cost direct reduction pellet alternative.
Market depicted a surge in buying interest after the lunar New Year holidays with an expectation of higher end-user utilization of pellets and attractive reselling margins at the port.
As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports was recorded at 5.6 mn t as against at 5.5 mn t assessed a week ago.
Spot Lump premium- Spot Lump premium was witnessed at $0.5105. Lump premium continued to be supported by sintering restrictions in Tangshan and a lower supply of lump from the miners.
2. Coking coal offers slide down w-o-w- Seaborne coking coal prices continued to fall throughout the week, due to limited spot demand from end-users in ex-Chinese markets. Spot transactions reported for premium coking coals were concluded at lower price levels as sellers reduced offers to attract buyers.
Market sentiments remained bearish on limited buying interest, as the excess supply and low demand resulted in softening of prices.
The latest offers for the Premium HCC grade are assessed at around $115.50/t FoB Australia, as against $122/t FoB basis a week ago.
3. Chinese domestic billet prices settled with a rise of RMB 120 ($18.4/t)- During the mid-week, amid falling futures, domestic billet prices witnessed a fall of over RMB 100 ($15.3). However, towards the weekend, prices rebounded and settled with a rise of RMB 120/t ($18.4/t). The prices of commonly traded Q235 billet 150mm diameter were reported at RMB 4,430/t ($681/t) in Tangshan, including 13 % VAT.
4. China HRC export offers continue to remain on higher side- Chinese exporters continued to offer HRC for exports at $720-725/t FoB basis against $715-720/t Fob. Meanwhile, major steel mills are offering around $740/t FoB basis. The surge in marine freight charges and possible rebate cuts in exports kept the higher HRC offers supported in the global market.
The domestic HRC price for the current week is floated at around RMB 4,920-4,950/t (Eastern China) up by RMB 120/t as against RMB 4,800-4,830/t (Eastern China) a week ago.
Firstly, the surge in price is supported by the strict orders provided by China’s central government to shut down blast furnaces covering 450 cubic meters in Tangshan province (the nation’s steelmaking hub) to curb air pollution.
Secondly, the futures market was performing well at the beginning and pushed offers as high as RMB 4,950-4,980/t (Eastern China) mid-week. However, prices showed a slight decline towards the week-end on weakening futures.
5. Domestic rebar price increases w-o-w on production cuts- Rebar producing mills have raised their offers by RMB 30-50/t to RMB 4,560-4,600/ t (Northern China) in comparison with RMB 4,530-4,550/t (Northern China) a week ago. Higher rebar futures and improved demand resulted in higher rebar offers in the domestic market.
Leave a Reply