Chinese steel prices across product categories showed an uptrend following gains in HRC and rebar futures on the Shanghai Futures Exchange (SHFE) and improvement in domestic demand.
January-February export-import data:
i) China’s steel exports rose by 49% y-o-y to 12.19 mnt in January-February 2023 compared to 8.18 mnt in the same period last year.
ii) Steel Imports fell by 44% y-o-y to 1.23 mnt in January-February against 2.21 mnt in the same period last year.
iii) Iron ore imports were recorded at 194.2 mnt in January-February, up 7.3% on y-o-y basis.
Steel inventory at China Iron and Steel Industry Association-(CISA) affiliated mills dropped in late-February. However, crude steel production increased significantly in the same period.
Steel inventory:
- Steel inventory at CISA mills stood at 17.41 mnt in late-February. Inventory decreased 2.11 mnt or 10.80% as against 19.53 mnt in mid-February.
- Inventory rose 932,900 t or 5.66% compared to late-January.
- Inventory increased 1.31 mnt or 8.19% compared to the year-ago period.
Crude steel output:
- The average daily crude steel output of CISA-affiliated mills stood at 2.22 mnt in late-February, up 6.09% from mid-February.
- The average daily finished steel output stood at 2.25 mnt in the period under review, up 10.01% m-o-m. The same increased by 8.1% y-o-y.
- The average daily pig iron output stood at 2 mnt in late-February, up 5.59% m-o-m and 9.5% y-o-y.
Product-wise sentiments-
1. Spot iron ore prices rise w-o-w: Chinese spot iron ore fines Fe 62% prices stood at $129.95/t CNF China on 10 March, inching up by $2.50/t w-o-w from against $127.45/t CNF China in the previous week. Trades improved resulting in an uptick in prices. Also, domestic iron ore concentrate prices increased which was supportive for market sentiments.
According to SteelHome data, iron ore inventory at major Chinese ports stood at 138.6 mnt on 2 March, a decrease of 3.8 mnt from 141.4 mnt last week.
a) Spot pellet premium edges down: The spot pellet premium for Fe 65% grade pellets was assessed at $19.10/t, down compared with $19.55/t last week.
b) Spot lump premium falls: The spot lump premium stood at $0.0940/dmtu, down by 0.0140 as against $0.1080/dmtu last week.
2. Coking coal prices fall: Coking coal prices fell by $5/t w-o-w to $363/t FOB compared with $368/t FOB last week owing to supply-demand mismatch.
3. Domestic billet prices rise: Steel billet prices in China’s Tangshan rose by RMB 70/t ($10/t) to RMB 4,030/t ($583/t), including 13% VAT, on 10 March. Improved demand, hike in futures and finished steel prices have kept billet prices supported. China’s SHFE rebar futures contract for May 2023 delivery closed at RMB 4,314/t ($625/t) on 10 March, an increase of RMB 42/t ($6/t) w-o-w.
4. HRC export offers rise: China’s HRC export offers rose by $20/t w-o-w to $695/t FOB as against $675/t FOB a week ago.
Domestic HRC prices increased by RMB 40/t ($6/t) w-o-w to RMB 4,270/t ($618/t) compared with RMB 4,230/t ($613/t) last week. Prices increased amid strong demand and lighter pressure from inventories. Spot prices were also supported by gains in HRC futures.
HRC futures on the SHFE rose by RMB 62/t ($9/t) w-o-w to RMB 4,410/t ($639/t) on 10 March.
5. Domestic rebar prices inch up: Chinese rebar prices inched up to RMB 4,240/t ($614/t) as against RMB 4,230/t ($613/t) last week. Prices edged up following rise in rebar futures which drove up demand. Also, rebar consumption increased by 475,000 t w-o-w to 3.57 mnt over the week ending Thursday. This further resulted in decline in inventory levels.
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