Chinese Steel Market Highlights – Week 21, 2019

This week Chinese steel prices showed fluctuating trend in domestic market amid deprecating currency Yuan against USD and volatility in futures. However export offers witnessed further decline amid softening demand since Chinese steel mills are unlikely to attract overseas customers by reducing export offers in global market.

Nation’s flat and rebar export offers witness decline on weekly basis. Coking coal offers also reported slump amid weak buying interest. Although iron ore prices reported hike amid supply concerns from Vale.

Chinese spot iron ore prices continued upside– Chinese spot iron ore prices opened up this week at USD 101/MT, CFR China and increased to USD 103.65/MT towards the weekend. The prices picked up amid supply concerns from Vale and due to falling inventory at Chinese ports.

Iron ore inventory at major Chinese ports fell to 131.7 MnT towards last weekend, lowest levels since mid Oct’17, according to data compiled by SteelHome consultancy. Also the port stock is expected to drop down to around 120 MnT by June’19.

Amid lower inventory levels in China, steel mills are expected to continue purchasing expensive material for full fledged operation.Also, Dalian iron ore futures for September touched 735 Yuan a tonne during the week, the highest since contracts were launched in 2013.

Spot lump premium witnessed at USD 0.3230/DMTU CFR China this week, down as against USD 0.3300/DMTU CFR China towards last weekend.

Spot pellet premium dropped W-o-W- Spot pellet premium for Fe 65% grade pellets dropped to USD 23.20/DMT, CFR China amid rising fines prices as against USD 31.40/DMT, CFR China a week before. At such pellet premium levels and rising steel margins, mills are seen attracted towards pellet and demand for lump seems to decline.

Coking coal offers slumped this week on low buying– Seaborne premium hard metallurgical coal prices witness decline on weekly basis over slowdown in buying activities from China.

Contrary to this, Chinese domestic coking coal prices have gained strength and are expected to increase further next week due to higher demand from coke plants.

However India’s downstream steel demand and coking coal imports have been subdued over the past few weeks on the back of political uncertainty. Thus demand for imported coking coal is likely to pick up in upcoming days post election results.

Latest offers for the Premium HCC grade are assessed at around USD 205.50/MT FOB Australia. Previous week the offer was hovering at USD 212.50/MT FoB basis.

Chinese billet prices increase on weekly basis- This week Chinese domestic billet prices settled at RMB 3,590/MT, up RMB 40 against last week. Today prices climbed further to RMB 3,600/MT (including VAT) in Tangshan. Billet trade sentiments reported strong this week.

Chinese HRC export offers decline on softening overseas demand – Chinese HRC export offers reported fall this week owing to reduction of Yuan against USD and softening demand among overseas buyers.

On weekly basis nation’s HRC export offers reduced by USD 10-15/MT .Currently nation’s HRC export offer is assessed at around USD 510-520/MT FoB basis. Last week the offers stood at USD 520-525/MT FoB basis.

Few buyers are bidding on lower side at around USD 500/MT FoB basis.

Meanwhile prices in domestic market fell by RMB 10/MT on weekly basis and stood at RMB 4,010-4,020/MT in eastern China (Shanghai).

Thus pessimistic sentiments in domestic market amid fluctuating futures and weaker Yuan leads to fall in nation’s domestic prices.

Chinese rebar export offers fell amid competitive offers from other exporting nations- Nation’s rebar export offers fell this week amid lack of buying interest owing to cheaper offers from other exporting nations.

Currently nation’s rebar export offers are at USD 520-525/MT FoB China. Last week the offers were at USD 525-530/MT FoB basis.

However domestic rebar prices stood at RMB 4,030-4,070/MT (Eastern China) up by RMB 10/MT W-o-W against previous week prices which stood at RMB 4,020/MT inclusive of VAT taxes.

Thus lesser inventories of rebar and increase demand in construction sector will not result to sharp correction in domestic rebar prices in near term.

Chinese Steel Market Highlights – Week 21, 2019

Source- SteelMint Research