Chinese Steel Market Highlights- Week 51, 2019

This week Chinese domestic steel prices declined amid volatility in the futures market along with the anticipation of increased supply amid low trading activity in the winter season.

Meanwhile, HRC export offers witnessed continual rise amid easing US-China trade spat. Weak buying interest among overseas buyers led to a decline in Rebar export offers. Iron ore prices moved down over an increase in port inventories. Coking coal offers inched up slightly on active buying from China.

As per the latest data released by Chinese customs, Chinese crude steel output hit 9 months low and stood at 80.29 MnT in Nov’19. The previous lowest was in Feb’19 at 74.58 MnT. Meanwhile, the same inched down by 2% on a monthly premise as compared to 81.52 MnT in Oct ’19.

Meanwhile, China’s crude iron ore production stood at 79.25 MnT in Nov’19, up slightly on a monthly premise as against 78.05 MnT in Oct’ 19. The output picked up upon less severe production curbs in Nov ’19.

Spot iron ore prices fell during the week- Chinese spot iron ore prices opened up this week at USD 93.90/MT CFR China and dropped to USD 90.9/MT CFR China towards weekend amid lower steel margins leading to a shift towards medium grade ore. Also, rising port inventories contributed to the price drop for the week.

As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports increased to 129.2 MnT as against 127.6 MnT assessed towards the end of last week.

Spot pellet premium up amid tight domestic supply- Spot pellet premium for Fe 65% grade pellets picked up to USD 23.95/MT, CFR China as against USD 23.6/MT, CFR China assessed last week. The demand for imported pellets remained supported in China amid tightening domestic supply. Pellet inventory witnessed rise W-o-W to 6.2 MnT against 6 MnT a week ago.

Spot lump premium fell further over preference for fines- Spot Lump premium for the week has witnessed fall to USD 0.2495/dmtu as against USD 0.2500/dmtu last week. Few end users were heard replacing lumps by fines.

Coking coal prices inched up over active buying- This week seaborne coking coal offers inched up owing to increased trades from China. However, other Asian markets like India remained silent.

Meanwhile, China’s imported coking coal stocks at ports have declined, with total stocks at the five major Chinese ports dropping by 3% week-on-week to 6.7 million tonnes as of last week.

Premium HCC is assessed around USD 136/MT FoB Australia which was USD 134/MT FoB basis last week. This is equivalent to USD 150.5/MT CNF China remained stable on a weekly basis.

Domestic billet prices witness continual decline W-o-W- Chinese domestic billet market was settled at RMB 3,340/MT, down RMB 50/MT against RMB 3,390/MT in the previous week. The market sentiments in the country were reported weak.

Chinese HRC export offers rise further on easing US-China trade tensions- This week, the nation’s HRC export offers witnessed a further increase of USD 10/MT on the back of easing trade spat between US-China.

Hence, the current HRC export offer stands at USD 480-485/MT FoB China as compared to USD 470-475/MT FoB basis in the preceding week.

The domestic HRC prices slipped by RMB 10/MT W-o-W basis to RMB 3,870-3,880/MT (Eastern China), which was RMB 3,880-3,890/MT a week ago. Although the eastern region still faces a tight supply owing to the barriers such as production curbs and logistical constraints.

Chinese rebar export offers inch down on a weekly premise- The nation’s rebar export offer declined by USD 5-7/MT W-o-W basis amid low buying interest among overseas buyers.

Currently, the rebar export offer stands around USD 465-473/MT FoB China in comparison with USD 470-480/MT a week ago.

Also, the domestic rebar prices stood at RMB 3,810-3,840/MT (eastern China) down by RMB 60/MT as against RMB 3,870-3,900/MT a week ago amid falling temperatures and bad weather conditions.

Thus, the drop in trading activity amid the ongoing winter season shall lead to a downward trend in domestic and export prices in the near term.

Chinese Steel Market Highlights- Week 51, 2019

Source: SteelMint Research