China’s domestic steel prices witnessed an uptrend on expectation that demand will improve with the easing of concerns over the Covid-19 infections, which have been rising recently. Meanwhile, sharp gains in the futures market are also expected to lend some support.
However, coking coal and met coke prices witnessed a downward trend admist resistance by end-users on such elevated levels.
Product wise sentiments:
1. China spot iron ore prices increase w-o-w: Chinese spot iron ore fines Fe 62% prices opened at $152.4/t CNF China for the week and were assessed at $159.85/t, CNF China towards the weekend. Seaborne iron ore prices rose as production restarts in some parts of Tangshan buoyed by demand expectations.
“It was mainly the traders that were buying on the expectation of rising demand and swaps,” said an international trader source.
A few sources saw the fixed-price trades representing bullish price views on expectations of demand recovery and production restart in China post-the current Covid-19 outbreak.
Iron ore inventory at major Chinese ports stood at 156 mn t this week, inching up by 0.2 mnt as against 155.8 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 $55/t, down against $58.2/t last week.
b) Spot lump premium decreases w-o-w: Spot lump premium stood at $0.3125 as against $0.3770/dmtu, last week.
2. Coking coal prices down 23% w-o-w: Seaborne coking coal price plunged by 23% w-o-w basis amid buyers’ resistance to high prices and easing of panic over the Russia-Ukraine conflict.
The latest price for the premium HCC grade is assessed at around $480/tonne (t) FOB Australia as against $578/t FOB a week ago.
3. China’s billets prices up towards the weekend: Steel billets prices in China’s Tangshan witnessed a significant rise of RMB 60/t ($9/t), w-o-w. Domestic billets prices stood at RMB 4,860/t ($764/t), inclusive of 13% VAT, on 1 April, 2022. According to data maintained with SteelMint, the Chinese SHFE rebar futures contract for October 2022 delivery closed at RMB 5,160/t ($811/t) on 1 April 2022, a sharp increase of RMB 147/t ($23/t), w-o-w.
4. HRC export offers surge $50/t w-o-w: Chinese mills are offering HRC for exports at around $920/t FOB China levels, up by $50/t as against $870/t FOB a week ago.
Recent developments in China:
- Sharps gains in HRC futures: SHFE HRC futures contract for October 2022 delivery closed higher by RMB 37/t ($6/t) on the week at RMB 5,319/t ($836/t) against RMB 5,282/t ($830/t) last week.
- Demand keeps HRC prices supported: Steel mills kept HRC prices supported on the back of pent-up demand on easing Covid infections. Major regions such as Tangshan and Shanghai were under lockdowns at the beginning of this week.
- Hebei to ramp up output: Hebei – China’s top-most steelmaking hub, has been aiming to ramp up production in mills, which, in turn, supported ferrous futures market.
- Govt measures: Central government stimulus boosted market sentiments.
- HRC export offers up: Chinese HRC export offers have been heard at around $975-985/t CFR Pakistan towards the weekend, up from the level of $935-945/t CFR at the beginning of the week.
In the domestic market, HRC is being traded at around RMB 5,230-5,250/t ($822-825/t) eastern China, up RMB 60-70/t ($9-11/t) in comparison with RMB 5,160-5,190/t ($811-816/t) eastern China in the previous week.
5. Domestic rebar prices rise w-o-w: China’s domestic rebar prices stood at RMB 4,950-5,000/t ($778-786/t) northern China, up by RMB 130-150/t ($20-24/t) compared to RMB 4,820-4,850/t ($757-762/t) northern China in the previous week.
Slowdown in Covid cases, and ease in lockdowns at several parts of China helped in improving demand for rebar in the domestic market. Moreover, with the easing, logistics and construction activities are expected to gain momentum which will lend support to prices.
6. Shagang Steel hikes scrap buy prices: China’s Shagang Jiangsu Steel raised scrap procurement prices for the third time this month, sources informed. The company raised prices by RMB 50/t ($8/t) for all grades, effective 29 March, 2022. After the revision, prices of HMS (6-10mm) stood at RMB 3,920/t ($615/t) delivered to headquarters, including 13% VAT. The company raised bids in order to improve scrap deliveries amidst falling stocks due to Covid resurgence.
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