Chinese steel prices rose this week amid the hike in SHFE futures and following the People’s Bank of China releasing a notice regarding financial support for the property sector. Expectations of demand recovery post Lunar New Year holidays also pushed prices higher.
December export-import data
i) China’s steel exports dropped 3.3% m-o-m to 5.40 mnt in December as against 5.59 mnt in November.
ii) Steel Imports stood at 700,000 t in December, largely stable m-o-m compared to 750,000 t in November.
iii) Iron ore imports were recorded at 90.859 mnt in December, down 8% m-o-m against 98.85 mnt in November.
Product-wise sentiments
1. China spot iron ore prices increase w-o-w: Chinese spot iron ore fines Fe 62% prices stood at $127/t CNF China on 13 January, up $7.2 w-o-w, against $119.8/t CNF China in the previous week. Seaborne iron ore prices rose w-o-w on prospects of market revival following the Lunar New Year holidays.
Most steel mills have enough inventory for the upcoming holidays, with some inland mills having more than 20 days of inventory and coastal mills having more than 15 days’ inventory.
Iron ore inventory at major Chinese ports stood at 134.1 mnt on 5 January, up 0.45 mnt as against 133.65 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium edges down w-o-w: Spot pellet premium for Fe 65% grade pellets was assessed at $16.6/t compared to $16/t last week.
b) Spot lump premium rises w-o-w: The spot lump premium stood at $0.1125/dmtu, higher compared to $0.1100/dmtu last week.
Seaborne lump premiums remained stable because coking coal prices fell in China this week, according to sources.
2. Coking coal prices fall w-o-w: Australian coking coal prices fell by $5/t w-o-w to $309/t FOB against $314/t FOB last week. Indian buyers are stocked up at present. Although China has allowed Australian coal imports, demand remains slow due to the Lunar New Year holidays.
3. China’s domestic billet prices rise w-o-w: Steel billet prices in China’s Tangshan rose sharply by $70/t w-o-w. Prices stood at RMB 3,850/t ($574/t), including 13% VAT, on 13 January. A hike in futures and finished steel prices over the week kept billet prices supported, SteelMint notes. According to data maintained with SteelMint, China’s SHFE rebar futures contract for May 2023 delivery closed at RMB 4,173/t ($622/t) on 13 January, an increase of RMB 66/t ($10/t) w-o-w.
4. HRC export offers rise w-o-w: China’s HRC export offers rose by $15/t w-o-w to $625/t FOB as against $610/t FOB last week. The Chinese currency continued to fall, contributing to an increase in export offers.
Domestic HRC prices rose by RMB 30/t ($4/t) w-o-w to RMB 4,110/t ($613/t) compared with RMB 4,080/t ($608/t). The rise in SHFE HRC futures drew investors’ attention to the outlook after the Chinese New Year holidays (January 21-27, 2023) which has been boosted by a series of stimulus measures, leading to a rise in prices.
HRC futures on the Shanghai Futures Exchange (SHFE) rose by RMB 68/t ($10/t) w-o-w to RMB 4,200/t ($626/t) as on 13 January.
5. Domestic rebar prices increase w-o-w: China’s domestic rebar prices increased by RMB 80/t ($12/t) w-o-w to RMB 4,160/t ($620/t) from RMB 4,080/t ($608/t) last week. Prices rose as the People’s Bank of China issued a notice to commercial banks asking them to keep stable financing of property developers until 2023 so that the real estate sector can contribute to economic growth. This resulted in in a hike in rebar futures and spot prices.
6. Shagang Steel raises long steel prices by $7/t: China’s Shagang Steel raised long steel prices by RMB 50/t ($7/t) for mid-January sales. Effective prices-
- Rebar (16-25 mm): RMB 4,200/t ($626/t)
- Wire rods (6-10 mm): RMB 4,410/t ($658/t)
- Coiled rebar (8-10 mm): RMB 4,500/t ($671/t).
- All prices are ex-mill, including VAT.
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