Chinese Steel Market Highlights- Week 27, 2018

This week Chinese steel prices remained on lower side amid limited trades. Depreciating Yuan against USD remained a concern. Thus market sentiments in China continued to remain bearish on weak buying activities in domestic and export market.

Flat steel and rebar export offers inch down amid weak buying. Billet export offers witnessed sharp decline. Spot iron ore prices in China fell to almost 3-month low and coking coal prices remain range bound.

According to the industry sources, this week Tangshan has announced its plans to halve the number of steel producers in the city by 2020. The city which is home to 64 steelmakers has produced 92.7 MnT of steel in 2017 (11% of China’s total steel output) aims to have less than 30 steel mills by 2020 and cut it further to around 25 by 2025.

Tangshan city’s latest plan is in line with Hebei province’s target of curbing 40 MnT of steel smelting capacity during 2018-2020. The province aims to have just 60 steel enterprises by the end of the decade, with 90% of capacity controlled by its top 15 firms. As per the plan the city aims to slash 50% of steel capacities in some of its major cities by 2020.

Chinese spot iron ore prices hit 3-month low – Chinese spot iron ore prices opened up this week at USD 63.8/MT, CFR China and fell to USD 63.4/MT hitting nearly 3-months low as these price levels were last seen in end of Mar’18.Iron ore inventory at Chinese major ports stood at 156.38 MnT, down by 1.2 MnT W-o-W.

Spot lump premium moved up to USD 0.33/MT, CFR. Emision cuts in China has boosted demand for iron ore lump & pellets. Spot pellet premium increased and was assessed at USD 61.95/MT, CFR China.Imposed production cuts resulted in increased demand for lump observing hike in lump premium.

Coking coal offers remain range bound- Coking coal prices remain range-bound this week over weak buying activity from China.Moreover, strict port restrictions in the northern and southern regions are creating ambiguity in production planning for the Chinese steelmakers.Also possible cuts in steel and coke production due to environmental protection in china may keep coking coal prices on lower side.

Also demand from Indian steel mills remained sluggish due to arrival of monsoons.

Thus currently,Premium HCC prices were assessed at around USD 199/MT FoB Australia compared to USD 198.50/MT FoB basis last week.

Domestic billet prices in China remain range-bound – Domestic billet prices in China have edged up towards week close after witnessing fall throughout the week. Prices are assessed at RMB 3,680/MT (including VAT) for 150*150mm Q235 grade against close of RMB 3,660/MT (including VAT) a day before. Chinese billet export price assessment fell following decline in domestic billet prices last week.

Chinese HRC export offer inch down slightly- Chinese HRC export offers witness marginal decline.Thin trading amid bearish sentiments in domestic market has kept nation’s HRC export offers on lower side.

Currently Chinese HRC export offers heard around USD 590-595/MT,FoB China.However last week the offers are in range of USD 595-600/MT FoB basis.Payment are made on letter of credit basis for 1,000-10,000 MT.

Prices of HRC in the domestic market are gauged at RMB 4,180-4,210/MT (ex-works) in Eastern China and 4,080-4,100 /MT (Northern China).

Depreciation of Chinese currency yuan amid trade war between China and USA has resultant to decline in HRC prices from China.

Chinese Re-bar exports offers moved down marginally-Nation’s re-bar export offers showed uptrend in the beginning of the week.However towards the end of the week prices showed marginal decline as the bad weather has kept the demand on lower side.

Currently,nation’s re-bar export offers are at USD 550-552/MT FoB China. However last week the offers are assessed at USD 550-555/MT, FoB China.

Meanwhile prices in the domestic market stood at RMB 3,940-3,980/MT in (Eastern China) and RMB 3,870-3,910/MT in (Northern China).

Chinese Iron and Steel Prices Week 27,2018

Source-SteelMint Research