This week China’s steel market witnessed a positive price trend. Export offers reported an increase in bullish sentiments in the international market. Meanwhile, domestic market prices remain supported on the backdrop of announced production restrictions in Tangshan and Handan city of Hebei province, to control carbon emissions. This week, billet and coking coal prices remained stable.
Product-wise market sentiments are as below-
1.China spot iron ore prices up during the week- Chinese spot iron ore prices opened at $181.2/t, CFR China and increased to a ten-year high to reach $187.75/t, CFR China towards mid-week. The iron ore prices rallied as better market expectations for high-grade fines boosted the sentiment. Prices were supported by more end users procuring at portside ahead of the Labour Day holidays (May 1-5).
Meanwhile, procurement of higher-quality fines continued to remain in trend as market sources expect the strong downstream demand to continue, supporting current steel margins. However, premiums for lower quality medium grade fines weakened further.
As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports was recorded at 135.9 mn t as against at 135.85 mn t assessed a week ago.
- Spot pellet premium down w-o-w- Spot pellet premium for Fe 65% grade pellets was assessed at $59.45/t as against $60.3/t assessed last week. A shortfall of pellets is leading DR pellet plants to seek blast furnace grade and poorer quality substitutes to run operations at stable rates. As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports was recorded at 5.2mn t – stable w-o-w.
- Spot Lump premium dropped w-o-w- Spot Lump premium was witnessed at $0.5850/dmtu as against $0.6015/dmtu assessed last week. Seaborne lump premiums softened as some market sources expected supply to improve but there were sources which indicated that current levels could still be supported if prices of other high-grade alternatives continued to trend higher.
2. Coking coal prices remained unchanged this week- Seaborne coking coal prices remained steady, post conclusion of few transactions earlier this week. In China, spot activity was thin due to lack of availability for non-Australian premium coking coals.
The latest offers for the Premium HCC grade are assessed at around $110.00/t FoB Australia continued to remain at similar levels last week.
3. Chinese domestic billet prices remained stable w-o-w- This week, the Chinese domestic billet prices remained broadly stable despite fluctuating rebar futures. Thus, prices settled with a drop of RMB 10 ($1.5) at RMB 4,950/t ($762/t), ex Tangshan, including 13% VAT.
4. HRC export offers rose w-o-w- Major mills are offering HRC for export at around $885-920/t FoB China basis as against $880-890/t FoB basis in the last week. Meanwhile, tier I mills are offering at around $930/t FoB China.
Chinese mills have raised offers in line with higher international prices along with continued uncertainty on export rebate cuts.
This week the domestic HRC market prices touched a twelve-year high level and stood at around RMB 5,590-5,610/t (Eastern China), up by RMB 100-110/t w-o-w against RMB 5,480-5,510/t (Eastern China) a week ago.
The rise was on the account of:
a) Measures taken by Handan city, the second-largest steel hub in Hebei province, to reduce emissions by major mills until April 30 and continue it for the second quarter, which in turn boosted the market sentiments.
b) Robust downstream demand along with strong future market gains.
5. Domestic rebar prices moved up w-o-w- The price for rebar in the domestic market stood at RMB 5,100-5,140/t (Northern China), registering a hike of RMB 30-40/t w-o-w over increasing demand from the construction sector. Also, the news of the Ministry of Industry and Information Technology’s (MIIT) continual efforts to curb steel output in 2021, further led to a rise in the rebar prices. Last week, the price stood at around RMB 5,070-5,100/t (Northern China).
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