Chinese steel market exhibited mixed sentiments over the talks of possible rebate cut to curb steel output. Increased precaution against COVID and early exit of market participants for New Year holidays kept the market mostly mute. Along with this, adverse weather conditions in several parts of the nation continued to disrupt market activities.
Input material prices like coking coal and spot pellet premium witnessed a decline during the week. However, domestic prices of billets and rebar remained stable while HRC prices increased over rallying future market.
China spot iron ore price dropped during the week- Chinese spot iron ore prices opened at $156.05/ t this week. The iron ore prices increased to $158.05/t towards mid-week on optimistic demand outlook post Lunar New Year holidays. Some end-users begin restocking on expectation of better demand post holidays. However, the targeted reduction in CY ’21 crude steel output and high steel stocks in China caused some risk aversion. The iron ore prices decreased towards weekend to $155.90/t, on negative steel margins for both flat and long steel products.
As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports was recorded at 126.15 mn t against 126.2 mn t assessed a week ago.
Spot pellet premium down w-o-w-Spot pellet premium for Fe 65% grade pellets assessed was at $50.85/t, down against last week prices at $ 52.95/t. The prices slid on falling iron ore prices and higher supply. The market saw thin risk appetite for pellets given its lack of liquidity compared to fines.
Spot Lump premium up w-o-w-Spot Lump premium was witnessed at $ 0.4345/dmtu against $ 0.3825/dmtu last week. Lump demand has surged aggressively on sintering restrictions in Tangshan. Lump ore is favoured over sinter as a direct charge material into blast furnaces, while lump typically has higher met coke consumption than pellets. Lump premium is expected to weaken on expectation of weaker demand from March.
Coking coal prices decline w-o-w-Seaborne coking coal price decreased marginally this week amid lower-priced offers available for Chinese spot buyers.
Trading activity has slowed down as buyers turned cautious amid uncertainty over near-term prices following a series of higher-priced deals concluded during the latter half of last month.
China based end-users and traders have been actively seeking reselling opportunities since prices recovered after hitting rock bottom in January.
The Indian market is presently observing a steady resurgence in restocking demand for coking coal on the back of strong demand for steel and healthy production levels, coupled with a buoyant metallurgical coke market.
The latest offers for the Premium HCC grade are assessed at around $155.00/t FoB Australia, in contrast with $160.50/t FoB basis.
Chinese domestic billet prices remained stable- This week, the billet prices in the Tangshan market (Northeast China) broadly remained stable, against last week. The prices of commonly traded Q235 billet 150mm diameter was reported at RMB 3,850/t ($595/t) in Tangshan, inclusive of 13 % VAT.
HRC export offers up, trades remained muted – HRC export offers increased to $640-650/t FoB China compared to $630-650/t FoB basis a week back. However, the buyers kept bidding at $615-620/t FoB China basis, leading to no trades.
Offers moved up since Chinese manufacturers are concerned over the talks about export rebate cut to 8% which is about 13% at present in China. Further, mills have added a condition of losses to be borne by buyers either partially or fully in case the rebate cuts come into fruition.
Also, the mills have suspended export activities with more participants winding up for the upcoming Lunar New Year holidays from 11 Feb until 17 Feb.
In domestic market, HRC prices for the week moved up by RMB 30-40/t w-o-w to RMB 4,470-4,500/t (Eastern China) as against RMB 4,440-4,460/t (Eastern China) a week ago. The prices gained support from the rally in futures market along with an increase in restocking activities on concerns over delayed resumption after holidays.
Rebar export offers remain range-bound– Rebar export offers witnessed an increase and stood in the range of $620-650/t FoB China compared with $630-6 40/t FoB in the preceding week.
However, importers were heard bidding on the lower side at $610 FoB China, resulting in limited trades.
Domestic market prices continued to hover at RMB 4,110-4,160/t (Eastern China) with adverse weather conditions restricting construction and other allied activities.
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