Chinese authorities have pledged to rein in crude steel production in CY22, a move that has impacted Chinese steel prices this week. The market was already plagued by logistics issues and sluggish domestic as well as overseas demand.
Meanwhile, China’s leading mill, Shagang Steel, has kept construction steel prices unchanged for late April 2022.
Product-wise sentiments
1. China’s spot iron ore prices decrease w-o-w: Chinese spot iron ore fines Fe62% prices opened at $153.85/t CNF China for the week and were assessed at $150.5/t, CNF China towards the weekend. Asian iron ore prices fell following the news released by the Chinese state planning body that it plans to reduce national crude steel production. This caused market participants to remain cautious and wait for further clarity. A few sources expected steel margins to remain under pressure in the short term despite mildly improving steel demand. Iron ore inventory at major Chinese ports stood at 152.9 mnt this week, inching down by 2 mnt as against 154.9 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium down w-o-w: Spot premium for Fe65% grade pellets was assessed at $48/t, moving down from $53.3/t last week.
b) Spot lump premium stable w-o-w: Spot lump premium stood at $0.3100/dmtu, stable as against last week. Import margins were still favourable for mainstream lumps, but portside demand remained lacklustre, sources said.
2. Coking coal prices plunge $57/t w-o-w: Seaborne coking coal remained volatile this week and saw a net fall of 57/t w-o-w basis amid indications of improved supplies. The latest price for the premium HCC grade is assessed at around $449/tonne (t) FOB Australia, down $57/t as against $506/t FOB a week ago.
3. China’s billet prices edge down towards weekend: Steel billets prices in China’s Tangshan witnessed a decrease of RMB 20/t ($3/t) w-o-w. Prices stood at RMB 4,790/t ($737/t), inclusive of 13% VAT, on 22 April. According to data maintained with SteelMint, China’s rebar futures contract for October 2022 delivery on the Shanghai Futures Exchange (SHFE) closed today at RMB 4,964/t ($763/t), a fall of RMB 85/t ($13/t). Also, the same witnessed a sharp fall of RMB 94/t ($14/t) d-o-d.
4. HRC export offers down $35/t w-o-w: China’s HRC export offers fell by $35/t to $900/t FOB China this week, in comparison with $935/t FOB seen in the previous week. Logistical issues caused by the pandemic along with lucrative offers from other exporting nations such as India and Japan, have dampened demand for Chinese-origin HRCs.
In the domestic market, HRC prices edged down by RMB 40/t ($6/t) to RMB 5,120-5,130/t ($787-789/t) eastern China compared to RMB 5,150-5,180/t ($792-797/t) eastern China, a week ago. At the beginning of the week, China’s National Development and Reform Commission (NDRC) announced plans to lower the nation’s crude steel production in CY22 in comparison with that of CY21. This, in turn, boosted HRC futures and spot prices. However, towards the weekend, prices fell due to weak demand and on expectations of improved supplies admist lifting of lockdowns.
5. Domestic rebar prices rise on improved demand: With the easing of Covid-induced lockdowns at several regions of China, demand from downstream sectors improved, coupled with early gains in rebar futures. However, towards weekend, People’s Bank of China (PBOC) decided to adopt measures to maintain price stability through China’s monetary policy which impacted rebar futures. Domestic rebar prices moved up to RMB 5,080-5,100/t ($781-784/t) northern China from RMB 5,000-5,030/t ($769-774/t) northern China a week ago.
According to data maintained with SteelMint, China’s rebar futures contract for October 2022 delivery on the Shanghai Futures Exchange (SHFE) closed at RMB 4,964/t ($763/t) on 22 April 2022, down RMB 142/t as against RMB 5,106/t ($785/t) on 20 April 2022.
6. Shagang’s long steel prices remain unchanged: Steel product prices remained unchanged for late April 2022 sales. Current prices of long steel products are:
- Rebar (16-25 mm): RMB 5,350/t ($830/t)
- Wire rods (6-10 mm): RMB 5,310/t ($823/t)
- Coiled rebar (8-10 mm): RMB 5,400/t ($837/t)
All prices are on ex-mill basis, including VAT.
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