Chinese steel prices witnessed a downtrend this week on dull demand, falling futures and rising COVID-19 cases. Raw material as well as finished steel prices saw a correction, except domestic rebar prices which rose by 2% w-o-w on increased cost of production.
Product-wise sentiments:
1. China spot iron ore prices decrease on week: Chinese spot iron ore fines Fe 62% prices opened at $160.8/t CNF China for the week and were assessed at $154.65/t CNF towards the weekend. Seaborne iron ore prices fell as COVID-19 uncertainties hit downstream demand for finished steel. Iron ore inventory at major Chinese ports stood at 155.6 mnt this week, down by 0.4 mnt as against 156 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium down w-o-w: Spot pellet premium for Fe 65% grade pellets was assessed at $49.7/t, down from $55/t last week. Seaborne iron ore pellet premiums continued to dip as cheaper domestic alternatives shifted producers’ interest away from imported pellets.
b) Spot lump premium stable w-o-w: Spot lump premium stood at $0.3125/dmtu, stable as against last week. However, short-term demand outlook for lump is poor due to resilient coke prices and better cost effectiveness of portside imported pellets, several sources said.
2. Coking coal prices plunge $76/t on the week: Seaborne coking coal prices remained volatile this week and saw a net decline of $76/t w-o-w amid mixed buying sentiments globally. The latest price for the premium HCC grade is assessed at around $404/t FOB Australia as against $480/t FOB a week ago.
3. Billets prices fall towards the weekend: Steel billets prices in China’s Tangshan witnessed a decline of RMB 30/t ($5t) w-o-w. Prices stood at RMB 4,830/t ($759/t), inclusive of 13% VAT, on 8 April. According to data maintained with SteelMint, China’s rebar futures contract for Oct’22 delivery on the Shanghai Futures Exchange (SHFE) closed at RMB 5,019/t ($789/t) on 8 April, a sharp fall of RMB 141/t ($22/t), w-o-w.
4. HRC export offers unchanged: Chinese mills are offering HRC for exports at $920/t FOB China, unchanged against previous week. Sluggish demand in the overseas market, especially Europe, as well as cheaper cargoes available from other exporting countries such India has impacted the market.
In the domestic market, HRC was traded at RMB 5,160-5,180/t eastern China ($811-814/t), down RMB 70/t ($11/t) compared to RMB 5,230-5,250/t ($822-825/t) eastern China, a week ago. The decline in prices was due to the following factors:
- China was observing public holidays for three days at the beginning of this week which, in turn, led to a sharp decline in HRC futures market. For instance, according to data maintained with SteelMint, China’s HRC futures contract for Oct’22 delivery on the Shanghai Futures Exchange (SHFE) closed at RMB 5,158/t ($811/t) on 8 April, a sharp fall of RMB 117/t ($18/t), w-o-w.
- Demand in the domestic market was dull due to the resurgence in COVID-19 cases. On 6 April, 1,284 new cases and 21,711 new local asymptomatic carriers were reported, as per China’s National Health Commission.
5. Raw material costs drive domestic rebar prices: China’s domestic rebar price increased by RMB 100-120/t ($16-19/t) to RMB 5,070-5,100/t ($797-801/t) northern China as against RMB 4,950-5,000/t ($778-786/t) northern China in the preceding week. Despite weak demand and falling futures, China’s rebar prices rose on the back of increased cost of production admist soaring raw material prices, i.e. iron ore and scrap.
6. Shagang Steel raises scrap prices: China’s Shagang Group raised its scrap procurement prices by RMB 50/t ($8/t), effective 7 April. The hike is intended to secure supplies and stall deliveries from declining further. Current prices of HMS (6-10mm) are at RMB 4,020/t ($631/t) delivered to headquarters, including 13% VAT.
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