This week Chinese finished steel prices showed mixed trends amid production cuts from mills’ side, leading to mismatch between supply and demand. Moreover, rise in Shanghai Futures Exchange HRC and rebar prices w-o-w lent some support to spot prices towards the weekend.
October exim data
i) China’s steel exports rose by 4% m-o-m to 5.184 mnt in October as against 4.98 mnt in September.
ii) Steel Imports stood at 77,000 t in October, down by 13% m-o-m as compared to 89,000 t in September.
iii) Iron ore imports were recorded at 94.98 mnt in October, down 5% m-o-m against 99.71 mnt in September.
Product-wise sentiments:
1. China spot iron ore prices increase on support from steel: Chinese spot iron ore fines Fe 62% prices opened at $87.95/t CNF China for the week and were assessed at $92.25/t, CNF China towards the weekend. Spot prices of iron rose as the country relaxed some Covid-19 restrictions.
Despite the optimistic news in the market, some sources stated that uncertainty remains and they will remain cautious for the time being. Iron ore inventory at major Chinese ports stood at 136 mnt on 3 November 2022, up by 1.7 mnt as against 134.3 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium inches down w-o-w: The spot pellet premium for Fe 65% grade pellets was assessed at $22.1/t, inching down against $22.5/t last week. Pellet premiums dipped amid weakening margins of mills in the country.
b) Spot lump premium down w-o-w: The spot lump premium stood at $0.1130/dmtu, down against $0.1305/dmtu last week. Seaborne lump premiums inched even lower as demand for higher-grade raw materials remained weak.
2. Coking coal prices fall w-o-w: Coking coal prices fell by $16/t w-o-w to $300/t FOB against $316/t FOB last week. The prices fell due to dull demand and ample supply within the market.
3. China’s billet prices edge up towards weekend: Steel billet prices in China’s Tangshan increased by RMB 20/t ($3/t) w-o-w. Prices stood at RMB 3,500/t ($492/t), including 13% VAT, on 12 November. Improved buying interest followed by hikes in futures and finished steel prices supported domestic billet prices, SteelMint notes. According to data maintained with SteelMint, China’s SHFE rebar futures contract for January 2023 delivery closed at RMB 3,637/t ($512/t) on 12 November, a rise of RMB 75/t ($10/t) w-o-w.
4. HRC export offers plunge w-o-w: China’s HRC export offers plunged by $55/t w-o-w to $515/t FOB China against $570/t FOB last week. Demand for Chinese-origin HRCs was lacklusture this week despite increase in SHFE HRC futures. Buyers in Vietnam found Chinese mill offers less attractive and are awaiting the price revision by domestic steel producers. This, in turn, weighed on the market sentiments for Chinese HRCs.
Domestic HRC prices increased by RMB 70/t ($10/t) w-o-w to RMB 3,720/t ($523/t) following an increase in SHFE HRC futures. Meanwhile, supply-demand imbalance and slack season for consumption kept domestic demand under pressure this week.
HRC futures on the Shanghai Futures Exchange (SHFE) rose by RMB 108/t ($15/t) w-o-w to RMB 3,722/t ($524/t) as on 11 November.
5. Domestic rebar prices fall w-o-w: China’s domestic rebar prices edged down by RMB 20/t ($3/t) w-o-w to RMB 3,680/t ($518/t) from RMB 3,700/t ($521/t) last week. Production cuts by mills amid mainteanance shutdown led to mismatch between supply and demand. Moreover, demand for rebars remained weak impacting the spot prices.
6. Shagang raises scrap purchase prices: Shagang Steel raised scrap prices two times this week by RMB 100/t ($14/t) each for purchase of all grades of scrap. Post revision, HMS (6-10 mm) prices are at RMB 2,810/t ($395/t) delivered to headquarters, including 13% VAT, effective from 11 November.
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