This week Chinese steel prices rose amid improved demand, rising futures and declining inventories. However, coking coal prices witnessed a downtrend due to seasonal disruptions. Steel inventory at key Chinese mills stood at 19.03 million tonnes (mnt) in mid-July, a m-o-m increase of 5.45%, as per China Iron and Steel Association (CISA) data. The average daily crude steel output of CISA-affiliated mills was recorded at 1.99 mnt in mid-July, up by 1.1% m-o-m.
China Baowu Steel’s output was recorded at 61.47 mnt in the first six months of CY’22.
Product-wise sentiments:
1. China spot iron ore prices increase on week: Chinese spot iron ore fines Fe 62% prices opened at $104/t CNF China for the week and assessed at $114/t, CNF China towards the weekend. The spot price of iron ore in China rose sharply on bullish steel data and positive macroeconomic indicators.
News of production restarts earlier in the week is keeping the iron ore market supported. Also, lower margin losses and lower finished steel inventories helped boost iron ore prices.
Iron ore inventory at major Chinese ports stood at 135.5 mnt this week, up by 2.7 mnt as against 132.8 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium down w-o-w: Spot pellet premium for Fe 65% grade pellets was assessed at $26.45/t, down against $29.15/t last week.
b) Spot lump premium up w-o-w: Spot lump premium stood at $0.0895/dmtu, up as against $0.0500/dmtu last week.
More optimism was heard for seaborne lump premiums, as inventory accumulation at the portside improved
2. Coking coal prices fall w-o-w: Coking coal prices fell by $35/t w-o-w to $191/t FOB Australia against $230/t FOB Australia a week ago. The decline is due to seasonal slowdown and the drop in iron and steel production, with steel mills showing no interest for spot purchases.
3. China’s billet prices rise towards weekend: Steel billet prices in China’s Tangshan witnessed a rise of RMB 80/t ($12/t) w-o-w to reach RMB 3,630/t ($538/t), including 13% VAT, on 29 July. Spot prices recovered following a sharp increase in rebar futures due to an economic rebound in the country with few mills resuming operations. According to data maintained with SteelMint, China’s SHFE rebar futures contract for October 2022 delivery closed at RMB 3,996/t ($592/t) on 29 July, witnessing a sharp hike of RMB 133/t ($20/t) w-o-w.
4. HRC export offers recover slightly towards weekend: China’s HRC (SS400) export offers dropped by $37/t w-o-w to $588/t FOB towards mid-week against $625/t FOB a week ago. However, later in the week, offers rebounded by $10 on domestic price gains.
Lower production by mills during the week lifted market sentiments which resulted in rise in domestic HRC prices by RMB 130/t ($19/t) to RMB 3,900/t ($578/t) in northern China compared with RMB 3,770/t ($559/t) in the previous week. Moreover, traders adopted a wait-and-watch policy on anticipation of further price increase in August.
In addition, China’s HRC stocks declined 1% w-o-w to 2.72 mnt as on 29 July, against 2.75 mnt a week ago, as per Lange Steel data.
According to data maintained with SteelMint, SHFE HRC futures contract for October delivery rose by RMB 179/t ($27/t) w-o-w to RMB 3,974/t ($589/t) as on 29 July’22.
5. Domestic rebar prices up w-o-w: China’s domestic rebar prices increased by RMB 150/t ($22/t) to RMB 4,090/t ($606/t) in western China against RMB 3,940/t ($584/t) last week. Prices rose on the back of improved demand and significant fall in inventories. For instance, China’s rebar stocks registered a significant fall of 7% w-o-w to 5.53 mnt on 29 July, as against 5.94 mnt last week, as per Lange Steel data.
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