This week, China’s domestic steel prices witnessed mixed trends due to the decline in hot rolled coil (HRC) and rebar futures on the Shanghai Futures Exchange (SHFE) along with the recent landfall of Typhoon Muifa. However, active restocking post-the the Mid-Autumn holidays pushed up domestic rebar prices.
China’s crude steel production rose marginally by 3% m-o-m to 83.37 mnt in August 2022, against 81.43 mnt in the previous month. During January-August, 2022, total crude steel output totalled 693.15 mnt. The average daily crude steel output of CISA-affiliated mills stood at 2.09 mnt in early-September 2022.
Steel inventory at key Chinese mills stood at 17.06 mnt in early-September 2022, up by 7.03% m-o-m or 1.12 mnt, as per China Iron and Steel Association (CISA) data. Inventory rose by 5.76 mnt or 51.06% compared with the beginning of this year and up by 3.74 mnt, or 28.08% compared with early-September 2021.
Product wise sentiments:
1. China spot iron ore prices down w-o-w: Chinese spot iron ore fines Fe62% prices opened at $101.95/t CNF China for the week and were assessed at $98.45/t, CNF China towards the weekend. Seaborne iron ore prices trended down amid the release of bearish Chinese macro-economic data that lowered the iron ore demand outlook.
The Chinese government released news showing a slowdown in the property market as investments in housing projects dropped on the year.
Iron ore inventory at major Chinese ports stood at 140.3 mnt this week, moving down by 1.8 mnt as against 142.1 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium edges up w-o-w: Spot pellet premium for Fe65% grade pellets was assessed at $20.60/t, moving up against $20.55/t seen last week.
Pellet premiums increased marginally on the week as port-side demand for pellets in China improved marginally though prices remained largely steady from the previous week.
b) Spot lump premium increases w-o-w: Spot lump premium stood at $0.1020/dmtu, showing an increase against $0.0945/dmtu last week.
2. Coking coal prices fall w-o-w: Coking coal prices fell by $21/t w-o-w to $251/t FOB Australia against $273/t FOB last week. Global steel demand continues to remain sluggish with only two coal deals being concluded in the last three weeks, providing limited support to coking coal prices.
3. China’s billet prices fall towards weekend: Steel billet prices in China’s Tangshan fell by RMB 60/t ($8/t) w-o-w. Prices stood at RMB 3,660/t ($524/t), including 13% VAT, on 16 September. Volatility in rebar futures and drop in finished steel prices, owing to weak demand, have pulled down prices. According to data maintained with SteelMint, China’s SHFE rebar futures contract for January 2023 delivery closed at RMB 3,686/t ($528/t) on 16 September, a drop of RMB 105/t ($15/t) w-o-w.
4. HRC export offers rise $15/t w-o-w: The recent outbreak at South Korea resulted in active inquiries from China, thus, supporting the uptrend in Chinese offers. A deal involving 100,000 t of HRCs was heard booked by South Korean buyers from China, SteelMint reported earlier this week. China’s HRC export offers rose by $15/t w-o-w to $595/t FOB China as against $580/t a week ago.
In the domestic market, HRC prices remained stable w-o-w at RMB 3,970/t ($569/t) in northern China due to heavy rains caused by the landfall of Typhoon Muifa.
SHFE HRC futures contract for January delivery fell by RMB 72/t ($10/t) w-o-w to RMB 3,758/t ($538/t) as on 16 September 2022.
China’s Baosteel has rolled over its monthly HRC prices for October 2022 sales due to subdued demand in the domestic market and declining profitability.
5. Domestic rebar prices up w-o-w: China’s domestic rebar prices rose by RMB 50/t ($7/t) w-o-w to RMB 4,130/t ($591/t) in western China compared with RMB 4,080/t ($584/t) a week ago. Active restocking by end-users post the Mid-Autumn festival, along with ease in Covid cases, have resulted in an increase in rebar prices.
6. Shagang Steel cuts long steel prices by $29/t: China’s Shagang Steel has decreased long steel prices by RMB 200/t ($29/t) for mid-September 2022 sales. Effective prices are:
- Rebar (16-25 mm): RMB 4,200/t ($601/t)
- Wire rods (6-10 mm): RMB 4,310/t ($617/t)
- Coiled rebar (8-10 mm): RMB 4,400/t ($630/t)
All prices are on ex-mill basis, including VAT.
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