This week, China’s domestic steel prices witnessed a downward trend amid the surge in Covid cases across the country leading to a tightening of restrictions and imposition of lockdowns. This further weighed on market sentiments resulting in weak demand in both the domestic and overseas markets.
The average daily crude steel output of CISA-affiliated mills stood at 2 mnt in mid-November 2022, up 0.44% from early-November 2022.
- Steel inventory at CISA mills stood at 17.30 mnt in mid-November 2022. It rose to 578,300 t or increased by 3.46% from 16.72 mnt in early-November 2022.
- Compared with end-October 2022, the inventory increased by 826,700 t, or 5.02%.
- The inventory rose by 3.37 mnt or 24.22% compared to the year-ago period.
Product-wise sentiments:
1. China spot iron ore prices increase w-o-w: Chinese spot iron ore fines Fe 62% prices opened at $96.25/t CNF China for the week and assessed at $99.65/t, CNF China towards the weekend. The spot prices of iron ore in China improved as liquidity and market confidence increased.
Some traders cited slight optimism and bullish sentiments for iron ore market demand outlook in the short-term owing to the Chinese Spring Festival, which begins in early 2023.
Iron ore inventory at major Chinese ports stood at 138 mnt on 24 November 2022 moved up by 2.55 mn t as against 135.45 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium inch down on week: Spot pellet premium for Fe 65% grade pellets was assessed at $22.35/t, inched down as against $22.4/t last week.
b) Spot lump premium up w-o-w: Spot lump premium stood at $0.1485/dmtu, rise as against $0.1450/dmtu last week.
According to several sources, seaborne lump premiums increased slightly as speculative buying continued in anticipation of further sintering cuts to be implemented in the future.
2. Coking coal fall w-o-w: Coking coal prices fell by $13/t w-o-w to $247/t FOB against $260/t FOB last week. The prices continued their fall due to muted demand from steel mills globally.
3. China’s billet prices edge down towards weekend: Steel billet prices in China’s Tangshan decreased by RMB 20/t ($3/t) w-o-w. Prices stood at RMB 3,540/t ($493/t), including 13% VAT, on 25 November. According to data maintained with SteelMint, China’s SHFE rebar futures contract for January 2023 delivery closed at RMB 3,736/t ($521/t) on 25 November, a rise of RMB 20/t ($3/t) w-o-w.
4. HRC export offers down w-o-w: China’s HRC export offers dropped by $20/t w-o-w to $550/t FOB China as compared with $570/t FOB last week. Weak demand for Chinese HRCs amid resurgence of covid cases have kept buyers on sidelines. Market participants opine that removal of export duty by Indian government will lead to an increase in both supplies and competition in the exports market.
Domestic HRC prices edged up by RMB 10/t ($1/t) w-o-w to RMB 3,780/t ($527/t) compared with RMB 3,770/t ($525/t) a week ago. Prices remained rangebound this week amid rising Covid-19 cases, resulting in both tightening and imposition of restrictions across various provinces of China. Demand remained weak despite stimulus measures introduced for the real estate sector.
5. Domestic rebar prices drop w-o-w: China’s domestic rebar prices dropped by RMB 60/t ($8/t) w-o-w to RMB 3,750/t ($523/t) from RMB 3,810/t ($531/t) last week. Demand for construction steel remained under pressure as construction projects are getting delayed due to subsequent lockdowns imposed following the surge in Covid cases. This, along with the resurgence of Covid cases, forced producers to lower their output, which further reduced supply into the market.
China’s rebar production declined by 9.5% on year to 198.3 million tonnes over January-October, according to the new data released by the National Bureau of Statistics (NBS).
6. Shagang raises construction steel prices by $7/t: China’s Shagang Steel has raised construction steel prices by RMB 50/t ($7/t), for late-November 2022 sales. Effective prices-
- Rebars (16-25 mm): RMB 3,950/t ($551/t)
- Wire rods (6-10 mm): RMB 4,360/t ($608/t)
- Coiled rebars (8-10 mm): RMB 4,450/t ($620/t).
- All prices are ex-mill, including VAT.
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