This week Chinese steel prices fell despite a rise in HRC and rebar futures. However, prices gained some momentum towards the end of the week due to improved buying interest and the interest rate hike by the United States Federal Reserve.
Product-wise sentiments:
1. China spot iron ore prices recover on steel price rebound: Chinese spot iron ore fines Fe 62% prices opened at $79.5/t CNF China for the week and were assessed at $88.05/t CNF China towards the weekend. Spot prices of iron ore continued to trend up amid improvement in steel prices.
Despite the optimistic news in the market, seaborne buying interest remained tepid as import losses deterred any trading activity.
Iron ore inventory at major Chinese ports stood at 134.3 mnt on 3 November, up by 2.3 mnt as against 132 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium down on week: The spot pellet premium for Fe 65% grade pellets was assessed at $22.5/t, down as against $24.1/t last week.
Pellet premiums fell due to sluggish demand in China and weak mill margins, sources said.
b) Spot lump premium down w-o-w: The spot lump premium stood at $0.1305/dmtu, down from $0.1550/dmtu last week.
Lump premiums continue to fall with more widespread production cuts by mills.
2. Coking coal prices up w-o-w on supply concerns: Coking coal prices rose by $4/t w-o-w to $316/t FOB against $307/t FOB last week. Prices rose as wet weather in Australia led to supply concerns providing support to coking coal prices.
3. China’s billet prices fall w-o-w: Steel billet prices in China’s Tangshan fell by RMB 30/t ($4/t) w-o-w. Prices stood at RMB 3,480/t ($484/t), including 13% VAT on 4 November. Bearish market sentiments, volatility in futures and finished steel prices throughout the week weighed on domestic billet prices. According to SteelMint data, China’s SHFE rebar futures contract for January 2023 delivery closed at RMB 3,562/t ($496/t) on 4 November, a rise of RMB 72/t ($10/t) w-o-w.
4. HRC export offers down w-o-w: China’s HRC export offers edged down by $5/t w-o-w to $570/t FOB China. Market sentiments remained bearish this week too, as buyers adopted a wait-and-watch policy amid weak demand for Chinese-origin HRC.
Domestic HRC prices fell by RMB 70/t ($10/t) w-o-w to RMB 3,650/t ($508/t) compared with RMB 3,720/t ($518/t) last week. Meanwhile, HRC prices rose on 3 November after the US Federal Reserve announced a hike in interest rates by 75 basis points (bps) to target of 3.75-4%. In addition, HRC stocks held with traders and mills fell by 108,000 t w-o-w to 3.20 mnt.
HRC futures on the Shanghai Futures Exchange (SHFE) rose by RMB 60/t ($8/t) w-o-w to RMB 3,614/t ($503/t) on 4 November.
5. Domestic rebar prices fall w-o-w: China’s domestic rebar prices dropped RMB 60/t ($8/t) w-o-w to RMB 3,700/t ($515/t) from RMB 3,760/t ($523/t) last week. However, rebar prices rebounded towards the end of the week supported by improved demand from end-users after touching two-year-low levels. Market participants are pessimistic about near-term prices due to Covid-related lockdowns and weak seasonal demand.
6. Shagang lowers rebar prices by $14/t: China’s Shagang Steel has lowered rebar prices by RMB 100/t ($14/t), while wire rods and coiled rebar prices remained flat for early-November sales. Effective prices-
- Rebar (16-25 mm): RMB 4,000/t ($557/t)
- Wire rods (6-10 mm): RMB 4,310/t ($600/t)
- Coiled rebar (8-10 mm): RMB 4,400/t ($612/t)
- All prices are ex-mill, including VAT.
7. Shagang cuts scrap purchase prices: Shagang Steel has lowered scrap prices by RMB 100/t ($14/t) for purchase of all grades of scrap. Post revision, HMS (6-10 mm) prices are at RMB 2,610/t ($363/t) delivered to headquarters, including 13% VAT, effective from 31 October.
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