Chinese steel prices for most product categories saw an upward trend following gains in HRC and rebar futures on the Shanghai Futures Exchange (SHFE) and improved market sentiments.
The average daily crude steel output of CISA-affiliated mills stood at 2.06 million tonnes (mnt) in early February 2023, up 4% from late January.
Steel inventory at CISA mills stood at 18.02 mnt in early February, up 1.54 mnt or 9.36% from 16.48 mnt in late January. Compared with early January, inventory rose by 3.14 mnt, or 21.11%.
Product-wise sentiments-
1. China spot iron ore prices range-bound: Chinese spot iron ore fines Fe 62% prices stood at $124.7/t CNF China on 16 February, down $ 1/t w-o-w, against $126.1/t CNF China in the previous week. Prices fell earlier this week due to uncertain steel market outlook. However, prices recovered later in the week on improved buying interest.
Iron ore inventory at major Chinese ports stood at 140.9 mnt on 16 February, up 2.55 mnt, as against 138.35 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium edges up w-o-w: Spot pellet premium for Fe 65% grade pellets was assessed at $19.8/t, higher compared to $16.45/t last week.
b) Spot lump premium falls: Spot lump premium stood at $.1135/dmtu, up as against $0.1280/dmtu last week. Smooth supply and poor steel margins cast a shadow over lump demand. The potential of lump premiums will depend on how quickly the real estate and infrastructure markets revive.
2. Coking coal prices up w-o-w: Coking coal prices rose by $20/t w-o-w to $390/t FOB against $370/t FOB last week. Prices rose amid disruption in supplies. In addition, there was strong buying interest.
3. China’s domestic billet prices rise: Steel billet prices in China’s Tangshan rose by RMB 60/t ($9/t) to RMB 3,850/t ($561/t), including 13% VAT, on 17 February. A hike in futures throughout the week supported billet prices. According to data maintained with SteelMint, China’s SHFE rebar futures contract for May 2023 delivery closed at RMB 4,167/t ($607/t) on 17 February, a sharp increase of RMB 93/t ($13/t), w-o-w.
4. HRC export offers inch up w-o-w: China’s HRC export offers inched up by $5/t w-o-w to $660/t FOB as against $655/t FOB a week ago. Global market sentiments improved with mills increasing domestic prices in a few countries.
Domestic HRC prices increased by RMB 60/t ($9/t) to RMB 4,150/t ($604/t) compared with RMB 4,090/t ($595/t) a week back. Concerns over improvement in domestic HRC market demand have eased and market participants are anticipating a pick up in demand in the coming weeks. Moreover, an increase in SHFE HRC futures lifted market sentiments this week.
HRC futures on the Shanghai Futures Exchange (SHFE) surged by RMB 102/t ($15/t) w-o-w to RMB 4,243/t ($618/t) on 17 February.
The world’s top steelmaker, Baosteel, raised its monthly HRC prices by RMB 200/t ($29/t) m-o-m for March sales. The company has raised prices for the third consecutive month amid rising global HRC prices, increasing raw material costs and expected demand recovery.
5. Domestic rebar prices rise w-o-w: China’s domestic rebar prices rose to RMB 4,150/t ($604/t) as against RMB 4,090 ($595/t) w-o-w, mainly due to the improvement in trading of construction steel.
6. Shagang Steel keeps long steel prices unchanged: China’s Shagang Steel rolled over the list prices of its major long steel products for domestic sales. Effective prices-
- Rebar (16-25 mm): RMB 4,400/t ($641/t)
- Wire rods (6-10 mm): RMB 4,560/t ($664/t)
- Coiled rebar (8-10 mm): RMB 4,650/t ($677/t).
- All prices are ex-mill, including VAT.
7. Shagang cuts scrap purchase prices: Shagang Steel trimmed scrap purchase prices for the first time this month by RMB 50/t ($7/t) for all grades of scrap. Post revision, HMS (6-10 mm) prices stood at RMB 3,150/t ($459/t) delivered to headquarters, including 13% VAT, effective from 14 February.
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