Chinese steel prices exhibited mixed trends during the Labour Day holidays this week. As a result, market activities slowed down, resulting in a decline in prices, especially as Shanghai announced relaxation on construction activities along with easing of logistics operations.
Product-wise sentiments
1. China spot iron ore prices decrease: Chinese spot iron ore fines Fe 62% prices opened at $142.9/t CNF China for the week and assessed at $139/t, CNF China towards the weekend. Seaborne iron ore prices tumbled as weak downstream steel demand in China dented the iron ore demand outlook.
Despite the fact that bearish sentiment has returned to the market, sources report that import losses between the seaborne and Chinese portside markets have narrowed further.
Iron ore inventory at major Chinese ports stood at 149 mn t this week inched up by 0.4 mn t as against 148.6 mn t a week ago, as per data maintained by SteelHome.
a) Spot pellet premium stable: Spot pellet premium for Fe 65% grade pellets was assessed at $45.55/t, stable against last week.
b) Spot lump premium down: Spot lump premium stood at $0.2735/dmtu, down as against $0.3075/dmtu last week. Lump premiums weakened as mills looked for cheaper alternatives such as sinter and non-mainstream lumps.
2. Coking coal prices largely stable: Seaborne coking coal prices remained largely stable at $517/t wow basis after some volatility throughout the week. The latest price for the premium HCC grade is assessed at around $517/tonne (t) FOB Australia as against $518/t FOB a week ago.
3. Billet prices edge up post-Labour Day holidays: Steel billet prices in China’s Tangshan witnessed an increase of RMB 20/t ($3/t) w-o-w. Prices stood at RMB 4,760/t ($714/t), inclusive of 13% VAT, on 6 May. According to data maintained with SteelMint, China’s rebar futures contracted for October 2022 delivery on SHFE closed on 6 May at RMB 4,734/t ($710/t), a fall of RMB 176/t ($26/t), w-o-w. Meanwhile, the same witnessed a sharp fall of RMB 189/t ($28/t), d-o-d.
4. HRC export offers unchanged: China’s HRC export offers remained largely flat at $850/t FOB China, against previous week. The market in UAE remained inactive amidst Eid holidays from the Friday last week through Thursday of the current week, whereas buyers in Vietnam continue to remain focused on domestic procurement before moving to imported ones. Moreover, Vietnamese mills are expected to announce their price policies for the July and early-August sales in the upcoming week.
In the domestic market, HRC prices dropped by RMB 20-30/t ($3-5/t) to RMB 4,950-4,980/t ($743-747/t) eastern China compared to RMB 4,980-5,000/t ($747-750/t) eastern China, a week ago. China was observing Labour day holidays from 1-5 May, as a result of which market activities were slowed down. Moreover, downstream data such as – the national absolute price index increased by 1.07% to RMB 5,392 ($809) from last week, while the same declined by 8.12% against the same period last year, as per Lange Steel data.
5. Domestic rebar prices up on strong demand: Lesser restrictions on construction activities and relaxed logistics led to an improvement in downstream demand, resulting as a hike in rebar price. China’s domestic rebar prices moved up by RMB 60-70/t ($9-11/t) to RMB 5,030-5,060/t ($755-759/t) northern China compared to RMB 4,960-5,000/t ($744-750/t) northern China last week.
In addition, the absolute price index assessed by Lange steel for long products was recorded at RMB 5,209 ($781), up by 1.58% against previous week. However, the same declined by 6.28% on y-o-y basis.
6. Shagang rolls over longs steel prices: China’s Shagang Steel has rolled over long steel product prices for early-May’22 sales. Effective prices:
- Rebar (16-25 mm): RMB 5,350/t ($810/t)
- Wire rods (6-10 mm): RMB 5,310/t ($804/t)
- Coiled rebar (8-10 mm): RMB 5,400/t ($817/t)
- All prices are on ex-mill basis, including VAT.
In the short term, the domestic steel market will face the combined influence of weak construction sector, high cost support, and strong expectations on demand outlook, and the steel market is likely to show a downward trend next week.
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