Chinese Steel Market Highlights – Week 32, 2018

This week Chinese steel prices remained volatile over fluctuation in steel futures. China proposed to start early winter production cuts with 50% pig iron production cut in some of the north China cities this year starting from 1 October’18. This is 45 days earlier than that China did in 2017. Shandong province has unveiled its three years plan (i.e. till 2020) which includes crude steel capacity cuts of 3.5 MnT.

Increase in Hebei province’s electricity demand amid heatwave in China has led to power shortage in China’s top steelmaking province resulting in less output.

Chinese finished steel export volumes in Jul’18 fell to 5.886 MnT down by 15% M-o-M. China’s iron ore and pellet imports recorded at 89.96 MnT in July’18, up 8% M-o-M.

Baosteel has raised Hot rolled coils prices by Yuan 50/MT for the month of September. Flat steel and rebar export offers continued to remain steady over weak buying. However Chinese iron ore and coking coal prices witness uptrend in beginning of the week.

Spot pellet premium shoots up – Spot pellet premium assessed at USD 69.20/DMT, CFR China, up by USD 5.50/DMT W-o-W against 63.70/DMT a week before. The enormous surge in the pellet premium is attributed to limited pellet supply in global market over Swedish miner – LKAB (EU largest iron ore producer and 2nd largest producer in seaborne pellet market) declaring a force majeure.

Chinese spot iron ore prices – Chinese spot iron ore prices opened up this week at USD 68.95/MT, CFR China against USD 66.45/MT, CFR China towards last week end.

Spot lump premium fell by USD 0.0100/MT this week to USD 0.24/MT, CFR, due to high lump inventories at port side along with surge in coke prices, rendering reduced preference for lumps.

Coking coal offers moved up this week- Seaborne coking coal offers moved up in the beginning of the week amid improved trades.

Meanwhile coking coal prices remain supported owing to ongoing environmental restrictions.Few coal wash plants remain shut down while certain mines have lowered their coal output.

However truck movements remain restricted but they have increased rail movement which has kept coking col prices supported.

Thus currently,Premium HCC prices moved up and are assessed around USD 182/MT FoB Australia compared to USD 175.50/MT FoB basis a week ago.

Chinese billet prices move up – Domestic billet prices in China have continued to strengthen on hike in futures and increase in raw material prices. Current spot price assessment is at around RMB 3,990/MT (including VAT) for 150*150mm billet Q235, up by RMB 60/MT W-o-W.

Chinese HRC export offers remain steady over subdued demand-Chinese HRC export offers have continued to remain steady despite uptrend in domestic prices in Shanghai and Tangshan regions.Meanwhile buyers in South East Asian countries are also bidding on lower side.

Currently Chinese HRC export offers heard around USD 575-580/MT, FoB China.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 4,280-4,300/MT (ex-works) in Eastern China and 4,210-4,220 /MT (Northern China).

Thus production cuts in China may reduce supply in near term which may results in increased prices in domestic market.

Chinese Re-bar export offers continue to remain flat-This week Chinese rebar export offers continue to remain flat as they remain unattractive for overseas buyers as other suppliers like Turkey and Qatar are offering material at lower prices.

Currently,Chinese re-bar export offers are at USD 555-560/MT FoB China.Bids remained on lower side which is around USD 545/MT FoB China.

Meanwhile prices in the domestic market stood at RMB 4,220-4,270/MT in (Eastern China) and RMB 4,150-4,190/MT in (Northern China).

Chinese Iron and Steel Prices Week 32,2018

Source-SteelMint Research