Chinese steel prices saw a mixed movement this week. Concerns over restricted supplies of finished steel in the near term and through H2 of the year along with NDRC’s announcement of strict vigilance in the futures and spot prices provided a ground for finished steel prices to rise.
Meanwhile, demand for finished steel continued to remain low on disruptions due to the typhoons. This also weighed on demand for raw materials, especially iron ore, eventually leading to a decline in their prices.
China’s crude ROM up in Jul’21: China, the world’s largest consumer and importer of iron ore, recorded run of mine (ROM) iron ore production of 87.87 million tonnes (mn t) in Jun’21, marginally up against 87.61 mn t in May’21, according to data released by the National Bureau of Statistics.
1. China’s spot iron ore prices tumble on low demand prospects-
Chinese spot iron ore prices opened at $220.05/tonne (t) CNF China for the week but decreased to $201.90/t, CNF China towards the weekend.
Prices decreased as the market was flooded with offers. End-users kept on reselling cargoes as demand is expected to remain low due to stricter output curbs in China. Following government directives, several steelmakers have already shut down their blast furnaces to limit production in H2CY’21.
Sources informed that the switch towards a lower Fe blending mix is underway to manage costs and lower production. However, high domestic coke prices are limiting any upside for fines with high impurities.
As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports was recorded at 129.5 mn t as against at 129 mn t assessed a week ago.
- Spot pellet premiums down w-o-w- Spot pellet premiums for Fe 65% grade pellets were assessed at $61.85/t as against $63.45/t assessed last week. The iron ore pellets market continued to fall on subdued demand.
Seaborne pellet premiums edged lower this week, with higher spot supply from Indian producers, while demand from China was quiet. Also, sources said, high-value cargoes like pellets would be the hardest to sell due to expectations of price drops.
As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports recorded was at 4 mn t, as against 4.1 mn t assessed last week.
- Spot lump premiums decline on waning demand- Spot lump premiums were recorded at $0.5150/dmtu as against $0.5500/dmtu last week. Sources saw weak interest in lumps as demand from end-users waned.
Seaborne lump premiums dropped further amid lower mainstream lump usage among end-users to manage costs. Emission controls in the second half of the year are expected to hamper overall iron ore demand but may smoothen the drop in lump premiums as direct feeds are usually favoured under strict environmental controls.
2. Coking coal prices continue rising on firm ex-China demand- Seaborne coking coal prices continued to increase over the past week, with several high-priced spot deals concluded in the ex-China markets. Furthermore, a major European end-user issued a buy tender for Australian Peak Downs North branded premium mid-volatile matter, with an end-Aug’21 laycan.
Even as demand for Australian coking coal has been persistently high in most Asian markets, excluding China, the Indian market remained subdued over a downtrend in steel demand and metallurgical coke prices amid the ongoing monsoon.
Meanwhile, supply concerns increased in China on ongoing safety checks, suspension of operations at various coal mines, and import restrictions on Australian coals.
The latest price for the premium HCC grade was assessed at around $212.50/t FoB Australia, which was around $211.50/t FoB a week ago.
3. Chinese domestic billet prices rise towards weekend- According to data maintained with SteelMint, the Shanghai Futures Exchange (SHFE) rebar futures Oct’21 contracts on 23 Jul closed at RMB 5,671/t ($875/t), up w-o-w by RMB 120/t ($19/t).
Tracking the hike in futures, domestic steel billet prices in China’s Tangshan region inched up to RMB 5,200/t ($803/t) inclusive of 13% VAT on 23 Jul’21. On a weekly basis, Chinese domestic billet prices have recorded a hike of RMB 60/t ($9/t).
4. HRC export offers up $10/t w-o-w- Chinese mills have upped their export offers further to $940-950/t FoB China as against $930-950/t FoB a week ago. A few tier-I mills were also heard quoting offers at $1,000-1,030/t FoB on anticipated tight supplies and recent market chatter about the levy of an export tax in early Aug’21.
However, cheaper material from India has increased competition in the South East Asian region while Covid-19 concerns kept weighing on demand. Furthermore, there were bids from importers in other traditional markets of South America and Africa amid limited demand.
In the domestic market, HRC prices remain range-bound at RMB 5,860-5,910/t (eastern China) in comparison with RMB 5,860-5,900/t (eastern China) a week ago. Production volumes remained low due to power supply shortages in Yunnan and Henan provinces. Along with that, temporary high production curbs in Tangshan kept prices in a narrow band during the week.
5. Domestic rebar prices rise w-o-w- Domestic rebar prices moved up by RMB 110-120/t w-o-w to RMB 5,280-5,300 (northern China) as compared to RMB 5,070-5,120/t (northern China) in the previous week.
Demand, overall, continues to remain weak due to the seasonal slowdown while the recent typhoons Cempaka and IN-FA hindered activities in the eastern provinces.
However, expecting a decline in production, the Chinese steelmaker, Shagang Steel, revised its long steel prices upwards on 21 Jul’21 for late-Jul sales. Rebar prices have moved up by RMB 250/t, while those for wire rods and coiled rebar by RMB 200/t. All prices are on ex-mill basis, including taxes. Rebar (16-25mm) are at RMB 5,550/t ($857/t), wire rods (6.5mm) at RMB 5,810/t ($897/t), and coiled rebar (8-10mm) at RMB 5,800/t ($896/t).
6. Shagang Steel lifts scrap purchase prices- The steelmaker announced the first hike in scrap procurement prices for all grades by RMB 80/t ($12/t) for the month on 19 Jul’21. After the revision, the current price for HMS (6-10 mm) stands at RMB 3,850/t ($594/t), inclusive of 13% VAT, delivered to headquarters.
Leave a Reply