Finished steel prices in China continued to remain under pressure. This was due to the possibility of heavy rainfall in most provinces which can impact downstream industrial demand for finished products.
Meanwhile, a stalling of construction works owing to security checks ahead of the 100th anniversary of the Chinese communist party too dealt a blow to demand.
On the other hand, prices of raw materials like iron ore gained further strength on supply concerns.
Product-wise sentiments are given below
1. China spot iron ore prices- Chinese spot iron ore prices picked up for the week. The prices opened at $206.55/t CNF China for the week and increased to $218.70/t, CNF China towards the weekend. The prices increased on buying interest in mainstream medium-grade cargoes amid limited supply.
Although steel margins softened in China amid seasonally weaker demand, iron ore procurement interest remains concentrated on medium- and high-grade fines.
The domestic concentrate supply crunch continued to play out in China as the underground mines in Shanxi province were not expected to come back online soon.
The prospect of heavy rainfalls dampened sentiments in the iron and steel markets as a stricter implementation of sintering and production curbs ahead of the celebrations for the 100th anniversary of the Chinese Communist Party on July 1 was expected to stabilise steel prices.
As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports were recorded at 123.95 million tonnes (mn t ) as against 124.6 mn t assessed a week ago.
Spot pellet premiums down w-o-w- Spot pellet premiums for Fe 65% grade pellets were assessed at $68.65/t as against $69.05/t seen last week.
Seaborne pellet premiums drifted sideways in the week as the slack season for steel dampened procurement interests for premium ores in China. The start of the rainy season in China and thinning margins among Chinese steelmakers were expected to put a cap on pellets demand. The margins for some mills that produce construction steel have now turned negative due to the slack season. End-users are having second thoughts when it comes to the purchase of premium products like pellets.
As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports were recorded at 3.5 mn t, against 3.6 mn t assessed last week.
Spot lumps premiums down w-o-w- Spot lump premiums were at $0.7550/dmtu as against $0.7675/dmtu last week. As per market sources, the blending ratio of lumps would be the first to drop to manage steelmaking costs due to its poor cost competitiveness.
Also, lumps usage has started getting affected with the increased moisture content.
2. Coking coal offers continue to rise over supply concerns: Seaborne coking coal prices continued to gain strength from sustained demand in the Asian markets. Furthermore, ongoing safety checks and suspension of operations at various coal mines in China fuelled supply concerns.
On the other hand, Indian demand for seaborne coking coal remained largely subdued, as both steel consumption and metallurgical coke prices are declining due to the onset of the monsoon.
The latest prices for the premium HCC grade are assessed at around $184/tonne (t) FoB Australia as against $178/t FoB basis a week ago.
3. Chinese billet prices rise towards weekend- Market sentiments turned slightly supportive on 25 Jun’21 after the steel futures in China rebounded. According to data maintained with SteelMint, the Shanghai Futures Exchange (SHFE) rebar futures Oct’21 contracts settled with a d-o-d rise of RMB 133/t ($21/t) to RMB 5,066/t.
Following this, domestic billets prices in China also strengthened to RMB 4,840/t ($750/t) in Tangshan, including 13% VAT.
4. HRC export offers remained flat w-o-w- Chinese mills are offering HRCs for exports at $940-945/t FoB China, down $5/t w-o-w as against $940-950/ FoB last week. Continued uncertainties over prospects of an export tax imposition have kept overseas buyers away from the market.
The offer range of $900-910/t FoB, reported in the preceding week was for position cargoes.
In the domestic market, HRC prices moved down by RMB 80-120/t w-o-w to RMB 5,380-5,450/t (Eastern China) as against RMB 5,500-5,530/t (Eastern China) in the previous week.
Sluggish downstream demand amid rising inventories subdued HRC prices in the domestic market.
At the beginning of the week, the futures market tumbled but towards the end, it picked up following talks of production curbs on steel mills located in the Tangshan region in order to reduce air pollution.
5. Domestic rebar offers dip w-o-w- Rebar producers lowered their prices due to halted construction activities from July 1-5, for celebrating the 100th anniversary of the founding of the Communist Party of China.
Demand for rebar is moderate. Buyers have adopted a wait-and-watch mode, expecting a further decline in prices while sellers are lowering prices to generate more sales.
The current week’s offer stands at RMB 4,750-4,800/t (Northern China), down by RMB 170-180/t w-o-w as against RMB 4,930-4,970/t (Northern China) a week ago.
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