China’s steel prices witnessed downward trend this week amid weak demand from end users and adverse weather conditions.
Steel inventory at key Chinese mills stood at 17.05 mnt in early-August, a m-o-m increase of 0.45 mnt, or 2.73%, as per China Iron and Steel Association (CISA) data. Inventory increased by 5.75 mnt or 50.93% compared with the beginning of this year and up by 2.42 mnt, or 16.61% compared with early-Aug’21.
The average daily crude steel output of CISA-affiliated mills stood at 1.94 mnt in early-August.
China’s crude steel production stood at 81.4 mnt in July, down 6.4% on y-o-y basis. Total crude steel output during Jan-Jul’22 was 609.3 mnt.
Product wise sentiments:
1. China spot iron ore prices down w-o-w: Chinese spot iron ore fines Fe 62% prices opened at $104.4/t CNF China for the week and assessed at $99.7/t, CNF China towards the weekend. Seaborne iron ore prices continued to fall due to weak buying interest following the release of weak Chinese steel data.
Iron ore inventory at major Chinese ports stood at 139.2 mnt this week, increasing by 0.6 mnt as against 138.6 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 $25.45/t, down as against $26.4/t last week.
b) Spot lump premium inch up w-o-w: Spot lump premium stood at $0.1050/dmtu, up as against $0.1000/dmtu last week.
Seaborne lump premium rose slightly on the week despite divergent lump demand outlook.
2. Coking coal prices rise w-o-w: Coking coal prices rose by $32/t w-o-w to $271/t FOB against $239/t FOB. Traders were heard to be taking positions in anticipation of a demand pick up in the upcoming months. Also, steel mills in Japan and Korea were heard to be making Australian coal bookings after a lull of 2-3 months.
3. China’s billet prices plummet towards weekend: Steel billet prices in China’s Tangshan fell by RMB 110/t ($16/t) w-o-w following a sharp decline in rebar futures. Prices stood at RMB 3,660/t ($537/t), including 13% VAT, on 19 August, 2022. According to data maintained with SteelMint, China’s SHFE rebar futures contract for October 2022 delivery closed at RMB 3,929/t ($576/t) on 19 August, a sharp fall of RMB 221/t ($32/t) w-o-w.
4. HRC export offers up by $8/t w-o-w: China’s HRC (SS400) export offers rose by $8/t w-o-w to $620/t FOB China compared with $612/t a week ago. However, demand for Chinese HRCs remained weak due to bid-offer disparity and competitive offers from other exporting countries.
In the domestic market, HRC prices dropped by RMB 100/t ($15/t) w-o-w to RMB 3,920/t ($575/t) in the northern China against RMB 4,020/t ($590/t) in the previous week. Market sentiments remained bearish due to dull demand amid seasonal lull and power supply restrictions to industries. Moreover, a sharp fall in SHFE HRC futures impacted spot prices.
According to data maintained with SteelMint, SHFE HRC futures contract for October delivery fell sharply by RMB 179/t ($26/t) w-o-w to RMB 3,896/t ($572/t) as on 19 August.
5. Domestic rebar prices down w-o-w: China’s domestic rebar prices stood at RMB 4,160/t ($/t) western China, down RMB 40/t ($6/t), as compared with RMB 4,200/t ($616/t) in the previous week. Weak demand from end users and adverse weather conditions weighed on the market sentiments which resulted in decline in prices.
China’s rebar output fell by 19.8% y-o-y to 17.12 mnt in July 2022. The same dropped by 14.7% y-o-y to 136.32 mnt in Jan-Jul’22.
6. Shagang steel scrap prices fall towards weekend: China’s Shagang Steel prices witnessed fluctuations throughout the week. The company’s prices surged in the beginning of the week by RMB 300/t ($45) but fell towards the weekend by RMB 50/t ($7). After revision, HMS (6-10 mm) prices are at RMB 3,320/t ($490/t) delivered to headquarters, including 13% VAT. The company raised bids to attract scrap deliveries, however, later with the drop in steel prices, scrap purchase bids also witnessed a decline.
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