Raw material and semi-finished steel prices rose this week in the Chinese steel market amid an increase in SHFE rebar futures, while finished steel prices remained stable as domestic demand recovery slowed.
For the steel market, the recovery of the manufacturing industry will obviously drive demand for steel and, at the same time, the acceleration of major projects will drive demand for construction steel.
In the short term, the demand for manufacturing and construction steel is gradually firming up. From the suppliers’ perspective, due to the expected recovery of demand in the peak season and the rise in steel prices, profits of steel mills have continued to improve.
Product-wise sentiments-
1. China spot iron ore prices edge up w-o-w: Chinese spot iron ore fines Fe 62% prices stood at $127.45/t CNF China on 3 March, inching up by $0.80/t w-o-w, against $126.65/t CNF China in the previous week. Seaborne buying interest strengthened, with several cargoes expected to arrive in March being traded on the secondary market. Some market players prefer to wait until after China’s “Two Sessions” this weekend for additional clarification. Property market expectations are changing rapidly.
According to SteelHome data, iron ore inventory at major Chinese ports stood at 141.4 million tonnes (mnt) on 23 February, down 1.2 mnt from 142.6 mnt last week.
a) Spot pellet premium edges down: The spot pellet premium for Fe 65% grade pellets was assessed at $19.55/t, down compared to $19.75/t last week.
b) Spot lump premium rises: The spot lump premium stood at $0.1080/dmtu, up by 0.0225 as against $0.0855/dmtu last week. Lump premiums rose after falling continuously since the last one month.
2. Coking coal prices increase: Coking coal prices increased by $21/t w-o-w to $368/t FOB as against $347/t FOB last week. Strong buying interest from Asia and Europe led to the increase in prices.
3. Domestic billet prices rise: Steel billet prices in China’s Tangshan rose by RMB 30/t ($4/t) to RMB 3,960/t ($573/t), including 13% VAT, on 3 March. Hike in futures and finished steel prices kept billet prices supported, SteelMint notes. According to SteelMint data, China’s SHFE rebar futures contract for May 2023 delivery closed at RMB 4,272/t ($618/t) on 3 March, an increase of RMB 48/t ($7/t), w-o-w.
4. HRC export offers stable: China’s HRC export offers remained unchanged w-o-w at $675/t FOB. Export deals slowed as down traders received fewer enquiries during the week. However, it is expected that stimulus measures will support Chinese steel prices in the coming weeks, which held traders back from lowering their offers.
Domestic HRC prices remained stable at RMB 4,230/t ($608/t) w-o-w. The recovery in domestic HRC demand has slowed down after a sharp increase in trade in recent weeks.
5. Domestic rebar prices inch up: China’s domestic rebar prices inched up to RMB 4,230/t ($603/t) as against RMB 4,200 ($592/t) w-o-w. Mills are anticipating seasonal demand recovery during the month. In addition, production restrictions in Hebei province in north China has pushed up rebar prices.
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