This week, the Chinese steel market showed positive sentiments over increased downstream demand which in turn led to higher prices post resumption of activities after the week long Labor Day holidays. Also, the announcement on tax rebate adjustment fuelled optimistic sentiments in the Chinese market. However, the Chinese Government continues focusing on reducing excess capacities to reduce its carbon footprint.
China’s key steel statistics for Apr ’21 is as follows-
- China’s finished steel exports up by 6% m-o-m at 7.97 mn t
- Finished steel imports fell by 11% m-o-m to 1.17 mn t
- Iron ore and pellet imports down by 4% m-o-m to 98.57 mn t
Product-wise market sentiments are mentioned below-
1. China spot iron ore prices up during the week- Chinese spot iron ore prices opened at $186.45/t CNF China for the week and closed at $212.75/t, CNF China towards the weekend. The global iron ore fines prices have picked up to the highest level since CY ’09 as per data maintained with SteelMint.
Seaborne iron ore prices continued to break records on the back of heated demand and surging prices at Chinese ports. Seaborne iron ore prices soared after the Labor Day holiday, supported by a positive demand outlook and concerns of potential import difficulties from Australia. Market sources were concerned that the escalating tensions between China and Australia might result in difficulties in importing iron ore.
Seaborne iron ore prices rose sharply as traders bid up cargoes on strong steel market fundamentals. The market depicted increased seaborne interests for mainstream medium grade fines amid growing consumption of ores with higher than 60% Fe among Chinese steelmakers. With steel prices kept breaking records and high margins, mills are expected to continue to decrease low-grade fines usage and rely heavily on fines with relatively higher Fe.
As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports recorded at 131.05 mn t as against at 133.1 mn t assessed a week ago.
- Spot pellet premium down w-o-w- Spot pellet premium for Fe 65% grade pellets assessed at $62.4/t as against $ 66.1/t assessed last week. There were some buying interests from Chinese buyers amid expectations of further environmental control measures to support direct feed demand before the holidays. However, due to higher risks related to potential COVID-19 precautionary measures on pellet cargoes may weaken speculative demand.
As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports was recorded at 3.9 mn t, down against 4.1 mn t last week. - Spot Lump premium fell w-o-w- Spot Lump premium witnessed at $0.5500/dmtu as against $ 0.5700/dmtu assessed last week.
Market sources saw further weakness in lump premiums heading into June, as demand usually decreases due to the onset of the monsoon season in the southern part of China. However, the current strength in steel margins could support lump premiums in demand for high-grade material. Supply of the mainstream Australian lump remained low.
2. Coking coal offers witnessed decline- Seaborne coking coal prices continued to edge higher on latest transactions reported for various grades of premium hard coking coals, concluded at higher prices. The coking coal spot market saw active trading across various grades in China as market participants returned after the five-day Labor Day holidays.
The latest offers for the Premium HCC grade are assessed at around $109.00/t FoB Australia as against $110.00/t in the previous week.
3. Chinese domestic billet prices surged after labor holidays- Chinese domestic billet prices hiked significantly after the labor holidays by RMB 140 ($22), and yesterday settled at RMB 5,220/t ($812/t), up by RMB 230/t ($36) w-o-w. The uptrend in price rise was backed by increased SHFE rebar futures, which reportedly witnessed a rise of RMB 274/t ($42/t) after holidays, and yesterday settled at RMB 5,678/t ($883/t), up by RMB 287 ($45).
4. HRC export offers up w-o-w- Major mills are currently offering HRC for exports at $960-970/t FoB China in comparison with $920-940/t FoB China basis in the previous week. Chinese exporters have raised their offers on a bullish outlook after the tax rebate adjustment was reduced to 0% in HRC.
HRC prices in the domestic market recorded an all-time high over strong downstream industry demand, the price ranges between RMB 5,990-6,000/t (Eastern China), registering a hike of RMB 230/t w-o-w as against RMB 5,760-5,770/t (Eastern China) a week ago.
5. Domestic rebar offers surges on the week- Rebar producers have raised their offers by RMB 340-350/t w-o-w to RMB 5,520-5,540/t (Northern China) as against RMB 5,170-5,200/t (Northern China) last week. Prices have risen over strong seasonal demand, followed with the anticipation of production cuts in H2 as the Chinese Government has been taking continuous measures to control emission, wherein the steel sector shall be largely impacted.
6. Mills increase scrap purchase prices- The leading steel enterprises in Jiangsu Province have hiked scrap purchase prices by RMB 180/t ($28) for all grades. Price indication for HMS (6-10 mm) stands at RMB 3,720 ($576), inclusive of 13% VAT, delivered to headquarters. A surge in Chinese steel futures, higher margins, hike in global scrap and iron ore prices are heard to be the key reasons behind the price hike.
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