This week, the Chinese steel market exhibited mixed sentiments over continued uncertainty over rumours of an export tariff on steel. Also, new production restrictions in major cities of China impacted sentiments in the domestic market there.
Domestic Chinese prices remained largely flat on a weekly basis. HRC export offers dropped by 5%. On the other hand, China’s spot iron ore prices reported an increase on a weekly basis.
Product-wise sentiments are mentioned below:
1. China spot iron ore prices up during the week: Chinese spot iron ore prices opened at $202.85/t CNF China for the week and increased to $219.95/t CNF China towards the weekend. The prices increased amid resilient demand for mainstream fines cargoes before the Dragon Boat Festival holiday in China on June 14. Increased interest in lower-grade fines was heard as some mills started to give priority to cost-saving rather than maximising output. Seaborne iron ore prices picked up on expectations of further steel production curbs. Expectations of further production curbs in China, if implemented, could tighten steel supply and lift steel margins.
However, as construction activities were affected by the wet weather, especially in Southern China, sources expected steel and iron ore prices to face downward pressure.
As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports were recorded at 126.25 mn t as against 127.65 mn t assessed a week ago.
- Spot pellet premiums up w-o-w: Spot pellet premium for Fe 65% grade pellets were assessed at $64.2/t as against $64.05/t assessed last week. Seaborne iron ore pellet premiums inched higher on better demand and liquidity amid restocking interests from steelmakers despite continued weakness in steel margins.The high domestic coke prices in China and sustained sintering controls heard in Tangshan are also expected to encourage pellet usage as it could be added directly into blast furnaces. However, extended waiting time for port clearance of Indian pellet cargoes due to pandemic control measures continued to cause concern among traders.
As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports were recorded at 3.6 mn t, against 3.65 mn t assessed last week.
- Spot lump premium up w-o-w: Spot lump premium were at $0.7035/dmtu as against $0.5600/dmtu last week.Seaborne lump premiums gained support as sources saw limited supply of mainstream lumps as secondary prices remained firm. However, lump usage is being affected due to the increased moisture content.
2. Coking coal prices up w-o-w: Seaborne coking coal prices remained range-bound this week, with buyers refraining from seaborne procurement, as they awaited the result of a tender issued by an Indian steelmaker on 7 Jun ’21.
Overall, sentiments remained bullish on healthy demand and concerns over potential supply tightness, with tradable levels for various premium coking coal brands remaining elevated.
The latest price for the premium HCC grade is assessed at around $171.50/t FoB Australia in comparison with $167.00/t FoB basis assessed a week ago.
3. Chinese domestic billet prices up w-o-w: Chinese domestic billet prices settled at RMB 5,010/t ($783/t), ex-Tangshan, including 13% VAT on 11 June ’21, up by RMB 10/t ($1.6/t) on a w-o-w basis amid the up-trending SHFE rebar futures.
4. HRC export offers decline: China HRC export offers declined towards the weekend to $910-915/t FoB China as against $960-970/t FoB basis a week ago.
The export market remained muted over volatility in domestic prices and continued uncertainty over export tariffs for steel products.
Furthermore, South East Asian countries showed low buying intent as they are battling the resurging Covid-19 infections.
In the domestic market HRC prices moved up by RMB 20-30/t over sharp increase in the ferrous market triggered by growing concerns over raw material supplies.
On Tuesday, futures of steelmaking raw materials rallied when Chinese authorities announced that they would take measures to improve mining safety which in turn boosted finished steel futures.
Also, steel prices were backed by production cuts announced in the port city of Qinhuangdao in Hebei province.
In the current week, prices stands in the range of RMB 5,610-5,650/t (Eastern China) in comparison to RMB 5,580-5,630/t (Eastern China) traded last week.
5. Domestic rebar offers slashed w-o-w: The current week’s offers stand in the range of RMB 5,070-5,120/t (Northern China), slashed by 80-90/t w-o-w as against RMB 5,160-5,200/t (Northern China) a week ago.
Rebar prices dropped over low buying interest due to uncertainty on export tariffs and new production restrictions in Jiangsu province alongside the ongoing restrictions in Tangshan province.
China’s Shagang Steel slashed rebar prices by RMB 300/t for mid-Jun ’21 sales, while keeping other long steel prices unchanged. The revised price is effective from 11 Jun ’21. All prices are on ex-mill basis, inclusive of taxes. Rebar (16-25 mm) prices are at RMB 5,200/t ($814) (-RMB 300).
6. China’s Shagang Steel lifts scrap purchase prices by RMB 100/t: China’s largest EAF steelmaker, Shagang Jiangsu Steel, has announced the first hike of RMB 100/t in scrap purchase price on 11 Jun ’21. After the latest revision, the current price for HMS (6-10 mm) stands at RMB 3,690/t ($578), inclusive of 13% VAT, delivered to headquarters.
Hike in imported scrap offers from Japan and the recent rise in Chinese steel futures have lifted scrap purchase bids.
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