China’s steel prices declined w-o-w amid weak domestic demand and falling futures. China’s steel demand is likely to fall by 4% this year with the low base effect of H2CY2022, as per World Steel Association’s (WSA) short range outlook. It is expected that steel demand will remain stable with new infrastructure projects, recovery in the real estate sector and new stimulus measures in CY2023. During January-August 2022, steel demand contracted by 6.6% from the same period last year.
Product-wise sentiments:
1. China spot iron ore prices edge down, likely to drop in near term: Chinese spot iron ore fines Fe 62% prices opened at $94.8/t CNF China for the week and assessed at $93/t, CNF China towards the weekend. Iron ore prices fell on weak seaborne liquidity as well as decreasing steel margins.
Market confidence fell even further as a result of negative market variables impacting total iron ore demand.
Iron ore inventory at major Chinese ports stood at 131.2 mnt on 20 October 2022, moved up by 1 mnt as against 130.2 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium decreases on week: Spot pellet premium for Fe 65% grade pellets was assessed at $24.25/t, moved down as against $26.95/t last week.
Pellets premiums declined w-o-w because of weak steel margins and lukewarm steel demand in the wake of Covid-19 curbs in China.
b) Spot lump premium down w-o-w: Spot lump premium stood at $0.1580/dmtu, decreased as against $0.2350/dmtu last week.
Seaborne lump premiums continued to trend downwards amid softening demand.
2. Coking coal prices rise w-o-w: Coking coal prices rose by $12/t w-o-w to $299/t FOB against $287/t FOB. The prices rose as heavy rains in Australia has affected mining activities leading to supply disruption. However, steel demand continues to remain weak globally.
3. China’s billet prices fall on weaker steel sentiments: Steel billets prices in China’s Tangshan decreased by RMB 40/t ($5/t) w-o-w. Prices stood at RMB 3,610/t ($498/t), including 13% VAT on 22 October. Weak market sentiments, drop in futures and finished steel prices have weighed on the domestic billets prices. According to data maintained with SteelMint, China’s SHFE rebars futures contract for January 2023 delivery closed at RMB 3,630/t ($501/t) on 22 October, a sharp fall of RMB 129/t ($18/t) w-o-w.
4. HRC export offers down w-o-w: China’s HRC export offers edged down by $10/t w-o-w to $580/t FOB China against $590/t FOB a week ago. The depreciation of Chinese currency weighed on the export offers, which drove buyers to sidelines. As a result, demand for Chinese origin HRCs remained under pressure.
In the domestic market, HRC prices fell by RMB 80/t ($11/t) to RMB 3,870/t ($535/t) against RMB 3,950/t ($546/t) last week. This week spot prices were impacted by tumbling futures and demand remained weak despite of positive consumption data, which showed a rise in apparent flat steel consumption by 1,57,600 t to 3.19 mnt.
Shanghai Futures Exchange (SHFE) HRC futures fell by RMB 68/t ($9/t) w-o-w to RMB 3,675/t ($507/t) as on 21 October 2022.
5. Domestic rebar prices down: China’s domestic rebars prices declined sharply by RMB 240/t ($33/t) w-o-w to RMB 3,880/t ($536/t) as compared with RMB 4,120/t ($569/t) a week ago. This week market sentiments remained bearish amid subdued demand. Also, the apparent consumption of rebars dropped by 37,000 t w-o-w to 3.22 mnt.
6. Shagang Steel lowers rebar prices: China’s Shagang Steel has lowered rebars prices by RMB 100/t ($14/t), while wire rods and coiled rebars prices remained unchanged for late-October 2022 sales. Effective prices-
- Rebars (16-25 mm): RMB 4,100/t ($566/t)
- Wire rods (6-10 mm): RMB 4,310/t ($595/t)
- Coiled rebars (8-10 mm): RMB 4,400/t ($607/t)
- All prices are ex-mill, including VAT.
7. Shagang cuts scrap purchase prices: Shagang Steel has lowered scrap prices by total of RMB 150/t ($/t) for the purchase of all grades of scrap. Post-revision, HMS (6-10 mm) prices are at RMB 2,810/t ($388/t) delivered to headquarters, including 13% VAT, effective from 22 October 2022.
Leave a Reply