Chinese Steel Market Highlights- Week 49, 2019

This week, Chinese domestic steel prices exhibited mixed market sentiments as Hot rolled coil prices went up and rebar prices reported plunged on weekly basis owing to increased inventories and reduced demand.

Meanwhile HRC export offers moved up over gains in domestic market. However rebar and billet export offers remain firm.Spot iron ore prices inched up amid temporary suspension rates at Brucutu Mines. Coking coal offers also remained stable over limited demand from Chinese suppliers.

Chinese spot iron ore prices up during the week- Chinese spot iron ore prices opened up this week at USD 88.7/MT,CFR China and picked up to USD 89.4/MT, CFR China towards weekend.

The prices picked up amid Vale announcement of temporary suspension at Brucutu mines.During the period of stoppage, the Brucutu mines is supposed to be operating at only 40% of its capacity through wet processing with tailings filtration and dry stacking.

The estimated impact of the same is at around 1.5 MnT of iron ore per month over the one-two months stoppage.

As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports dropped to 126.5 MnT as against 129.4 MnT assessed towards end of last week. However, pellet inventory witnessed slight increase W-o-W to 6.5 MnT against 6.4 nT a week ago.

Spot pellet premium up W-o-W – Spot pellet premium for Fe 65% grade pellets increased to USD 25.7/dmt, CFR China as against USD 24.05/dmt, CFR China assessed last week.The pellet premium has witnessed rise amid rising winter production curbs.

Spot lump premium fall on weekly basis- Spot Lump premium for the week has witnessed fall to USD 0.2600/dmtu,as against 0.2640/dmtu assessed last week.

Coking coal prices remain stable over limited bookings– Seaborne coking coal prices remained stable this week since Chinese steelmakers have are interested in booking material for imports.However buyers outside China are showing dull interest in spot cargoes of coking coal over limited demand .

Also,the implementation of import restrictions at Chinese ports may extend beyond this calendar year till Chinese New Year in late January in turn resulted to uncertainity and bearish sentiments.

Latest offers for the Premium HCC grade are assessed at around USD 133.75/MT FoB Australia unchanged over the previous week.

Chinese domestic billet prices move up on weekly basis– Chinese domestic billet market was settled at RMB 3,460/MT, up RMB 10/MT against RMB 3,450/MT last week.The market sentiments in the country were reported stable.

China HRC export offers strengthen over domestic gains- Nation’s HRC export offers inched up by USD 5/MT on a weekly premise over better margins in the domestic market.

Thus,current HRC export offers stand at USD 465-470/MT FoB China as compared with USD 460-465/MT FoB basis in the preceding week.

Meanwhile domestic HRC prices surged by RMB 50-60/MT W-o-W basis to RMB 3,760-3,770/MT (Eastern China), which was RMB 3,700-3,720/MT a week ago.

Initially, the prices rose with gains in the futures market, along with slow supplies owing to strict logistics rules allowing transportation of 1 coil per truck.This in turn raised steel prices in domestic market.

Chinese rebar export offers remain firm- Chinese rebar export offers remained stable this week amid weakening domestic prices

Meanwhile, overseas buyers holding high inventories and are not in an urgent need of material and have adopted wait and see approach in anticipation of decline in nation’s rebar export offers in near term.

Thus, the rebar export offers continue to hover at around USD 475-480/MT FoB China remained largely stable against previous week.

Nation’s domestic rebar prices plunged by RMB 140/MTW-o-W basis to RMB 3,870-3,900/MT (Eastern China) in contrast with RMB 4,010-4,040/MT in the previous week.

Prices reported decline in nation’s domestic market over increased inventory levels among traders over reduced demand.Meanwhile demand is likely to drop in near term amid ongoing winter season along with upcoming nation’s lunar new year holidays.

Chinese Steel Market Highlights – Week 49,2019

Source- SteelMint Research