Chinese steel prices exhibited mixed trends this week amid sharp decline in SHFE futures and economic work conference which failed to release more stimulus measures.
The average daily crude steel output of CISA-affiliated mills stood at 1.96 million tonnes (mnt) in mid-December, down 1.15% from early-December.
- Steel inventory at CISA mills stood at 15.99 mnt in mid-December, down 648,600 tonnes (t) or 4.23% from 15.34 mnt in early-December.
- Compared with mid-November, inventory declined by 1.31 mnt, or 7.57%.
- Inventory rose by 2.42 mnt or 17.83% compared to the year-ago period.
Product-wise sentiments-
1. China spot iron ore prices increase w-o-w: Chinese spot iron ore fines Fe 62% prices opened at $109.2/t CNF China for the week and assessed at $111.65/t, CNF China towards the weekend. Seaborne iron ore prices rose as news of heavy rainfall in Brazil led participants to anticipate tighter Brazilian cargo supply.
Meanwhile, Chinese steel mills continue to operate at negative margins. Many sources have cited improving demand for low-grade fines products as mills aim to keep their production costs low.
Iron ore inventory at major Chinese ports stood at 135.5 mn t on 22 December 2022 inched down by 0.65 mn t as against 136.15 mn t 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 $17.05/t, moved down as against $19.1/t last week.
b) Spot lump premium edge up w-o-w: Spot lump premium stood at $0.1195/dmtu, fell as against $0.1365/dmtu last week.
Lower bids and limited inquiries continue to pressure lump premiums further.
2. Coking coal prices rise w-o-w: Coking coal prices rose by $286/t FOB against $258/t FOB last week. This came amid the trade optimism on improvement in trade relations between Australia and China.
3. China’s billet prices fall w-o-w: Steel billet prices in China’s Tangshan fell by RMB 80/t ($11/t) w-o-w. Prices stood at RMB 3,730/t ($534/t), including 13% VAT, on 24 Dec’22. Weak demand, a sharp fall in futures, and finished steel prices have pulled down billet prices, SteelMint notes. According to data maintained with SteelMint, China’s SHFE rebar futures contract for May 2023 delivery closed at RMB 4,049/t ($579/t) on 23 December, a decrease of RMB 44/t ($6/t) w-o-w.
4. HRC export offers rise w-o-w: China’s HRC export offers increased by $10/t w-o-w to $600/t FOB as against $590/t FOB last week. Market sentiment was positive at the beginning of the week, later major Chinese mills kept their prices unchanged due to volatile SHFE futures.
Domestic HRC prices fell by RMB 50/t ($7/t) w-o-w to RMB 4,040/t ($578/t) compared with RMB 4,090/t ($574/t) last week amid the surge in Covid infections and the piling up of stocks are weighing down the market sentiments. In addition, the economic work conference also failed to release more stimulus measures.
China’s HRC stocks rose by 2% to 1.87 mnt w-o-w as on 23 December 2022.
HRC futures on the Shanghai Futures Exchange (SHFE) fell by RMB 77/t ($1/t) w-o-w to RMB 4,054/t ($580/t) as on 23 December.
5. Domestic rebar prices down w-o-w: China’s domestic rebar prices down by RMB 60/t ($9/t) w-o-w to RMB 3,920/t ($561/t) from RMB 3,980/t ($569/t) last week. Prices decreased w-o-w due to sluggish restocking demand and sharp decline in futures. Moreover, billet prices also dropped amid supply-demand imbalance.
6. Shagang Steel cuts scrap buy prices: Shagang Steel reduced scrap buy prices for the first time this week by RMB 50/t ($7/t) for all grades of scrap. Post revision, HMS (6-10 mm) prices stood at RMB 3,040/t ($435/t) delivered to headquarters, including 13% VAT, effective from 20 December.
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