This week, Chinese steel prices treaded lower amid a resurgence in Covid cases. Moreover, the exports market gained some momentum due to depreciation of the Chinese currency, even though HRC and rebar SHFE futures dropped against 10 October’s closing.
The average daily crude steel output of CISA-affiliated mills stood at 2.10 mnt in early October 2022.
Steel inventory at Chinese mills in early October 2022 stood at 16.31 mnt, up by 4,34,000 t or 2.73% from late-September 2022, as per CISA data.
Product wise sentiments:
1. China spot iron ore prices at around one-year low: Chinese spot iron ore fines Fe 62% prices opened at $98.75/t CNF China for the week and were assessed at $96.15/t, CNF China towards the weekend. Seaborne iron ore prices fell to around one-year lows on thin steel liquidity and Covid-19 resurgence.
Furthermore, strict Covid-19 measures following the Golden Week holidays resulted in more cautious buying in the seaborne market.
Iron ore inventory at major Chinese ports stood at 130.2 mnt on 13 October, down by 1.7 mnt as against 131.9 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium improves w-o-w: Spot pellet premium for Fe 65% grade pellets was assessed at $26.95/t, up as against $26.05/t last week.
Pellet premiums marginally improved after China returned from the week-long Golden Week holidays, but participants still see hiccups in terms of sharp price increases.
b) Spot lump premium up w-o-w: Spot lump premium stood at $0.2475/dmtu, an increase as against $0.1975/dmtu last week.
Sources saw space for lump premiums to increase amid sintering cuts.
2. Coking coal prices rise w-o-w: Coking coal prices rose by $13/t w-o-w to $287/t FOB against $274/t FOB a week ago. The prices are being supported by wet weather in Australia and chances of strike by coal mine workers over working conditions and job security reasons.
3. China’s billet prices edge down post-National Holidays: Steel billet prices in China’s Tangshan decreased by RMB 30/t ($4/t) w-o-w. Prices stood at RMB 3,650/t ($507/t), including 13% VAT on 14 October. According to data maintained with SteelMint, China’s SHFE rebar futures contract for January 2023 delivery closed at RMB 3,759/t ($523/t) on 14 October, a fall of RMB 40/t ($5/t) w-o-w.
4. HRC export offers stable w-o-w: The depreciation of the Chinese currency amid hike in interest rates by US Federal Reserve and disparity between bids and offers have weighed on market sentiments. As a result, China’s HRC export offers remained stable w-o-w at $590/t FOB China.
In the domestic market, HRC prices edged down by RMB 20/t ($3/t) to RMB 3,950/t ($549/t) against RMB 3,970/t ($552/t) as on 30 September 2022. Prices fell amid spike in Covid-19 cases throughout the country, which further imposed logistics restrictions impacting buying activities.
Shanghai Futures Exchange (SHFE) HRC futures fell sharply by RMB 146/t ($20/t) to RMB 3,743/t ($520/t) as on 14 October 2022.
China’s Baosteel has rolled over its monthly HRC prices for November 2022 sales due to subdued demand in the domestic market.
5. Domestic rebar prices down: China’s domestic rebar prices fell by RMB 40/t ($6/t) to RMB 4,120/t ($573/t) as compared with RMB 4,160/t ($578/t) as on 30 September 2022. Increasing Covid-19 cases along with bearish outlook for demand weighed on the domestic rebar prices this week.
6. Shagang Steel rolls over long steel prices: China’s Shagang Steel has rolled over long steel prices for mid-October 2022 sales. Effective prices-
- Rebar (16-25 mm): RMB 4,200/t ($584/t)
- Wire rods (6-10 mm): RMB 4,310/t ($599/t)
- Coiled rebar (8-10 mm): RMB 4,400/t ($612/t)
- All prices are on ex-mill basis, including VAT.
7. Shagang cuts scrap purchase prices: Shagang Steel has lowered scrap prices twice this week by a total of RMB 160/t ($22/t) for the purchase of all grades of scrap. Post-revision, HMS (6-10 mm) prices are at RMB 2,960/t ($412/t) delivered to headquarters, including 13% VAT, effective from 14 October.
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