Chinese steel prices exhibited mixed trends this week ahead of the Lunar New Year holidays (21-27 January 2023).
The average daily crude steel output of CISA-affiliated mills stood at 1.92 million tonnes (mnt) in early-January 2023, up 0.51% from late-December 2022.
Steel inventory at CISA mills stood at 14.88 mnt in early-January, up 1.83 mnt or 14.02% from 13.05 mnt in late-December. Compared with early-December, inventory declined by 0.45 mnt, or 2.96%.
Product-wise sentiments-
1. Spot iron ore prices increase w-o-w: Spot iron ore fines (Fe 62%) prices opened at $120.75/t CNF China for the week and assessed at $126.65/t, CNF China towards the weekend. Seaborne iron ore prices saw an uptrend as market participants continue to hold positive expectations on steel and iron ore demand following the Lunar New Year holidays.
Amid approaching holidays, only few steel mills continued to purchase iron ore at the portside to stock up inventory level.
Iron ore inventory at major Chinese ports stood at 134.3 mnt on 18 January 2023, inching down by 0.9 mnt as against 135.2 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium up w-o-w: Spot pellet premium for Fe 65% grade pellets was assessed at $17.1/t, moving up as against $16.6/t last week.
Asian pellet premiums extended gains in the week as restocking demand from buyers supported prices despite the approaching holiday lull.
b) Spot lump premium edges up w-o-w: Spot lump premium stood at $0.1150/dmtu, up as against $0.1125/dmtu last week.
2. Coking coal prices rise w-o-w: Australian coking coal prices increased by $16/t w-o-w to $325/t FOB against $309/t FOB last week. This came due to the heavy rainfall in the Queensland region which led to supply constraints. Shipments from major ports were affected due to operational disruptions.
3. China’s domestic billet prices fall w-o-w: Steel billet prices in China’s Tangshan declined by RMB 30/t w-o-w. Prices stood at RMB 3,820/t ($563/t), including 13% VAT, on 21 January. According to data maintained with SteelMint, Shanghai Futures Exchange (SHFE) rebar futures contract for May 2023 delivery closed at RMB 4,179/t ($616/t) on 20 January, an increase of RMB 36/t ($5/t) w-o-w.
4. HRC export offers rise w-o-w: China’s HRC export offers rose by $20/t w-o-w to $645/t FOB as against $625/t FOB last week. The optimistic outlook for the steel market prompted mills to increase their offers. However, many mills closed offers after selling out their allocations for March shipments, and were not ready to talk about new orders in the last week before the Chinese New Year vacations.
Domestic HRC prices dropped marginally by RMB 10/t ($1/t) w-o-w to RMB 4,100/t ($604/t) compared with RMB 4,110/t ($606/t). The domestic HRC market was subdued as market participants switched to the holiday mode.
HRC futures on SHFE rose by RMB 14/t ($2/t) w-o-w to RMB 4,207/t ($620/t) as on 20 January.
5. Domestic rebar prices stable w-o-w: China’s domestic rebar prices remained stable w-o-w to RMB 4,160/t ($613/t), mainly due to the slowdown in trade activities ahead of the Chinese New Year.
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