Chinese steel prices trended lower due to slower-than-expected demand post CNY holidays. Market sentiments were hit by a sharp fall in futures amid severe inspections by Chinese regulators to control iron ore pricing policy.
Product wise sentiments –
1. China spot iron ore prices fall on tightened NDRC checks: Chinese spot iron ore fines Fe 62% prices opened at $149.40/t CNF China for the week and was assessed at $133.50/t CNF China towards the weekend. Seaborne iron ore prices plunged as potential buyers remained on the sidelines.
Iron ore futures contracts on the Dalian Commodity Exchange (DCE) dropped further on Thursday as bearish market sentiment prevailed in response to the National Development and Reform Commission (NDRC) holding another meeting with the iron ore traders.
NDRC discussed measures to crack down on speculation to control soaring prices. Buying interest from the steel mills were also heard limited. Tradable values pegged by market participants also followed a similar downtrend, reflecting the current weakness in the market.
Iron ore inventory at major Chinese ports stood at 156.35 mnt this week up 0.95 mnt as against 155.4 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium up w-o-w: Spot pellet premium for Fe 65% grade pellets was assessed at $57.15/t, up as against $55/t last week.
b) Spot lump premium stable w-o-w: Spot lump premium remains unchanged at $0.3475/dmtu as against last week. Sources continued to see lump premiums stable for now, but short-term views remain polarised. Some expect better demand for lump with falling coke prices, while some see loosening sintering restrictions weakening demand for direct feed like lump and pellets.
2. Coking coal prices range-bound: Seaborne coking coal Australia FOB prices remained range-bound with buyers adopting a wait and watch mode. The latest price for the premium HCC grade is assessed at around $440/tonne (t) FOB Australia as against $439/t a week ago.
3. China’s billets prices fall towards the weekend: Steel billet prices in China’s Tangshan witnessed a sharp fall of RMB 110/t ($17/t) w-o-w. Domestic billets prices stood at RMB 4,630/t ($732/t), inclusive of 13% VAT, on 18 Feb. According to data maintained with SteelMint, the Chinese SHFE rebar futures contract for May’22 delivery closed at RMB 4,779/t ($755/t) on 18 Feb’22, a sharp w-o-w fall of RMB 126/t ($20/t). However, the same witnessed a rise of RMB 93/t ($15/t) d-o-d.
4. HRC export offers up w-o-w: China’s HRC export offers rose by $10-20/t to $820-840/t FOB China towards the beginning of the week as against $800-830/t FOB China a week ago. Furthermore, Chinese mills kept their offers in the range of $855-875/t CFR Vietnam levels through this week, although the prices announced by Formosa Ha Tinh and Hoa Phat for April deliveries are lower than these. Thus despite bearishness seeping into the market, mills have been showing their reluctance to reduce offers.
In the domestic market, HRCs were being traded lower at RMB 4,960-4,980/t ($784-787/t) eastern China, down RMB 160/t in comparison with RMB 5,120-5,140/t ($809-813/t) eastern China last week. A sharp fall in futures and a slower than expected demand post Chinese new year holidays have pulled down HRC prices.
China’s SHFE HRC futures for May’22 contracts settled at RMB 4,860/t on 18 Feb, down significantly by RMB 249/t w-o-w and RMB 4/t d-o-d, as per SteelMint data.
5. Domestic rebar prices down w-o-w: China’s domestic rebar prices witnessed a downtrend this week because of the following factors:
- Fall in rebar futures: SHFE rebar futures for May contract settled at RMB 4,730/t, down RMB 256/t w-o-w.
- Efforts of China’s government and State Administration to control ‘unhealthy practices’ in iron ore pricing policies.
- Adverse weather conditions in several parts of China, rains in the southern and eastern regions and snowfall in northern China, which has slowed construction activities.
Current week’s price stands at RMB 4,750-4,790/t ($751-757/t) northern China, down RMB 170-180/t in comparsion with RMB 4,930-4,960/t ($779-784/t) northern China in the previous week.
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