The Chinese steel market witnessed mixed sentiments this week with prices of raw materials declining while the rally continued for semi-finished and finished steel.
The average daily crude steel output of CISA-affiliated mills stood at 2.09 million tonnes (mnt) in mid-February 2023, up 1.49% from early-February.
Steel inventory at CISA mills stood at 19.53 mnt in mid-February, up 1.50 mnt or 8.32% from 18.02 mnt in early February. Compared with mid-January, inventory rose by 3.46 mnt, or 21.54%.
Product-wise sentiments-
1. China spot iron ore prices decrease w-o-w: Chinese spot iron ore fines Fe 62% prices stood at $126.65/t CNF China on 24 February 2023, inched down by $0.65/t w-o-w, against $127.3/t CNF China in the previous week. Iron ore spot prices in China fell w-o-w due to concerns about steel demand. Sources stated that the market’s seaborne buying interest remained limited as most market players were cautious.
Iron ore inventory at major Chinese ports stood at 142.6 mnt on 23 February, up 1.7 mnt as against 140.9 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium edge down w-o-w: Spot pellet premium for Fe 65% grade pellets was assessed at $19.75/t, down from $19.80/t last week.
b) Spot lump premium falls w-o-w: Spot lump premium stood at $0.0855/dmtu, lower as against $0.1135/dmtu last week. Despite the low mill margins, there is a sufficient lump supply from the sea. There won’t be any significant increase in lump premiums over the short term because there is no expectation of sintering restrictions being imposed.
2. Coking coal prices plunge w-o-w: Coking coal prices plunged $43/t w-o-w to $347/t FOB against $390/t FOB last week. Improvements in supplies have resulted in decline in prices as logistical bottlenecks have eased.
3. China’s domestic billet prices rise w-o-w: Steel billet prices in China’s Tangshan rose by RMB 80/t ($11/t) to RMB 3,930/t ($565/t), including 13% VAT, on 24 February. Improved demand, hike in futures and finished steel prices have supported billet prices. According to data maintained with SteelMint, China’s SHFE rebar futures contract for May delivery closed at RMB 4,224/t ($607/t) on 24 February, an increase of RMB 57/t ($8/t), w-o-w.
4. HRC export offers up w-o-w: China’s HRC export offers rose by $15/t w-o-w to $675/t FOB as against $660/t FOB a week ago. Mills also raised their offers to $675-685/t CFR Vietnam compared with $660-665/t CFR a week ago.
Domestic HRC prices increased by RMB 80/t ($11/t) to RMB 4,230/t ($608/t) compared with RMB 4,150/t ($596/t) a week back. Amid, SHFE HRC futures prices gained on recovering demand which lifted market sentiments this week.
HRC futures on the Shanghai Futures Exchange (SHFE) rose by RMB 41/t ($6/t) w-o-w to RMB 4,284/t ($616/t) on 24 February.
5. Domestic rebar prices increase w-o-w: China’s domestic rebar prices increased to RMB 4,200/t ($603/t) as against RMB 4,120 ($592/t) w-o-w. However, demand decreased due to higher prices as buyers had sufficient rebar stocks and planned to wait for lower prices.
6. Shagang Steel keeps long steel prices unchanged: China’s Shagang Steel rolled over the list prices of its major long steel products for late-February. Effective prices-
- Rebar (16-25 mm): RMB 4,400/t ($632/t)
- Wire rods (6-10 mm): RMB 4,560/t ($655/t)
- Coiled rebar (8-10 mm): RMB 4,650/t ($668/t).
- All prices are ex-mill, including VAT.
7. Shagang lifts scrap purchase prices: Shagang Steel has increased scrap purchase prices by RMB 50/t ($7/t) for all grades of scrap. Post revision, HMS (6-10 mm) prices stood at RMB 3,200/t ($460/t) delivered to headquarters, including 13% VAT, effective from 21 February.
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