This week Chinese steel prices witnessed mixed trends. While prices of billets and HRCs gained w-o-w amid rising futures and production cuts, those of rebar dropped on seasonal disruptions. Also, despite weak sentiments towards weekend, iron ore prices showed an improvement w-o-w amid the decline in coking coal prices, easing some of the losses, and levitating demand.
Product-wise sentiments-
1. China spot iron ore prices inch down towards weekend: Chinese spot iron ore fines Fe 62% prices opened at $100.9/t CNF China for the week and assessed at $100.35/t CNF China towards the weekend. Seaborne iron ore prices fell in the beginning of the week as weak steel demand continued to drag seaborne liquidity down. Later, iron ore prices rose on supportive downstream steel demand. Last weekend, prices were at around $96.6/t CNF China.
According to sources, while Chinese mills were suffering from negative margins, the drop in coke prices helped to mitigate the loss.
Iron ore inventory at major Chinese ports stood at 132.8 mnt this week, up by 2.2 mnt as against 130.6 mnt a week ago, as per data maintained by SteelHome.
a) Spot pellet premium edges up w-o-w: Spot pellet premium for Fe 65% grade pellets was assessed at $29.15/t, inching up against $29.1/t last week.
b) Spot lump premium down w-o-w: Spot lump premium stood at $0.0480/dmtu, moving down as against $0.0975/dmtu last week.
Seaborne lump expectations were largely pessimistic and several sources expected lump premiums to weaken further with limited interest in its usage.
2. Coking coal prices fall w-o-w: Coking coal prices fell by $12/t w-o-w to $226/t FOB Australia against $238/t FOB Australia a week ago. The fall was because of weaker steel demand in Asia and Europe. Heavy rains also failed to support prices this week.
3. China’s billet prices rebound on recovery in futures: Steel billet prices in China’s Tangshan witnessed a rise of RMB 150/t ($22/t) w-o-w following a significant recovery in rebar futures. Prices stood at RMB 3,550/t ($526/t), including 13% VAT, on 22 July. According to data maintained with SteelMint, China’s SHFE rebar futures contract for October 2022 delivery closed at RMB 3,863/t ($572/t) on 22 July, witnessing a sharp hike of RMB 274/t ($40/t) w-o-w.
4. HRC export offers up $7/t w-o-w: China’s HRC (SS400) export offers rose $7/t w-o-w to $625/t FOB from $618/t in the previous week. However, offers dropped towards the weekend on subdued overseas demand.
China’s domestic HRC prices rose by RMB 160/t w-o-w to RMB 3,770/t ($558/t) in northern China compared with RMB 3,610/t ($535/t) a week ago. Prices rose due to potential supply concerns amid mills opting for production cuts. However, demand remained muted due to seasonal factors.
According to data maintained with SteelMint, SHFE HRC futures contract for October delivery increased by RMB 142/t ($21/t) w-o-w to RMB 3,815/t ($565/t) on 22 July.
5. Domestic rebar prices fall by RMB 50/t ($7/t) w-o-w: China’s domestic rebar prices fell by RMB 50/t ($7/t) to RMB 3,940/t ($584/t) in western China compared to RMB 3,990/t ($591/t) in the previous week. In addition, China’s rebar stocks declined 7% w-o-w to 5.94 mnt as on 22 July, against 6.42 mnt a week ago, as per Lange steel data.
6. Shagang Steel lowers long steel prices: China’s Shagang Steel reduced long steel prices by RMB 300/t ($44/t) for late-Jul’22 sales. Effective prices-
- Rebar (16-25 mm): RMB 4,500/t ($667/t)
- Wire rods (6-10 mm): RMB 4,510/t ($668/t)
- Coiled rebar (8-10 mm): RMB 4,600/t ($681/t)
All prices are on ex-mill basis, including VAT.
7.Shagang Steel cuts scrap purchase prices: Shagang Steel cut scrap prices by RMB 100/t ($15/t) for all grades from 18 July. Post revision, prices of HMS (6-10mm) stand at RMB 2,670/t ($395/t) delivered to headquarters, including 13% VAT.
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