The Chinese steel market witnessed a downward trend in prices across product categories during the Christmas and New Year holidays. In general, end-user demand remains weak during the winter season.
1. Spot iron ore prices fall: Spot iron ore fines (Fe 62%) prices fell from $125/tonne (t) CFR China levels and closed at $119/t CNF China towards the weekend after falling to $117/t levels in the mid-week. Prices remained volatile throughout the week. However, a few sources highlighted that steel production cuts may be imposed ahead of the Winter Olympics.
a) Spot pellet premiums inch up w-o-w: Spot pellet premiums for Fe 65% grade were assessed at $56.15/t, up just above $1 w-o-w.
b) Spot lump premiums increased w-o-w: Spot lump premiums increased w-o-w to $0.203/dmtu. Demand for iron ore lumps remained firm.
2. Coking coal prices up $6/t w-o-w: Seaborne coking coal FOB prices rose by $7/t on the week amid tight supply. Weather-related concerns in Australia continue to weigh on market sentiments and offers in the spot market are limited.
Enquiries were heard from India for premium coking coal but no deal was reported to have been concluded. The latest price for premium HCC grade is assessed at around $357/t FOB Australia as against $351/t FOB in the previous week.
3. China’s billet prices fall towards weekend: Steel billet prices in China’s Tangshan witnessed a fall of RMB 120/t ($19/t), w-o-w. Domestic billet prices stood at RMB 4,270/t ($684/t), inclusive of 13% VAT, on 31 Dec. According to data maintained with SteelMint, Chinese rebar futures contract for May’22 delivery closed at RMB 4,315/t ($679/t) on 31 Dec, a sharp fall of RMB 204/t ($32/t), w-o-w.
4. HRC export offers drop $15/t w-o-w: Chinese mills have lowered HRC export offers during the week by $15/t to $865/t FOB China as against $780/t FOB a week ago.
Trade activities slowed down on account of Christmas and New Year holidays. Moreover, competitive offers from other exporters such as India, South Korea and Japan weighed on export offers from China.
In the domestic market, HRC is being traded at RMB 4,840-4,900/t ($762-771/t) eastern China, down 50-70/t ($8-11/t) in comparison with RMB 4,910-4,950/t ($773-779/t) eastern China a week ago.
A significant drop in HRC futures and more restrictions in production in the Jan-Mar’22 period in top steelmaking provinces such as Hebei have weighed on domestic trade market prices.
For instance, HRC futures contract for May’22 delivery settled at RMB 4,418/t ($695/t) as on 31 Dec, down significantly by RMB 201/t ($32) w-o-w.
5. Domestic rebar prices decline: Poor weather conditions amidst a drop in temperature in some parts of China affected construction activities, leading to a decline in rebar demand from end-users. Current week’s prices are assessed at RMB 4,500-4,550/t ($708-716/t) northern China, down RMB 140-150/t ($22-24/t) compared with RMB 4,640-4,700/t ($730-740/t) northern China.
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