Key highlights
- Iron ore prices recover with an increase in buying interest
- Strong domestic prices of HRC and Rebar kept export offers supported
- Baosteel has raised the HRC offer by $54
- Chinese mills resume Japanese scrap cargo bookings after roll-out of the new policy
China spot iron ore prices rose w-o-w- Chinese spot iron ore prices opened at $164.5/ t this week, increased to $171.75 towards the weekend. Iron ore prices strengthened further on robust buying interest. However, concern about Chinese iron ore demand and steel mill activity persists. The resurgence of the coronavirus is yet to have an impact.
As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports was recorded at 124.25 mn t as against at 126.75 mn t assessed a week ago.
Spot pellet premium up on tight supplies- Spot pellet premium for Fe 65% grade pellets assessed at $ 45.75/t up against last week prices at $ 44.1/t. The prices for pellets surged on the back of tight supply amid continued attractive steel margins for end-users. High Indian domestic demand and limited spot supply of pellet into China led to an increase in prices during the week. However, high-grade cargoes continue to be in strong demand given the current level of steel margins, leading to strong price support.
As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports dropped to 6.2 mn t this week against 6.7 mn t assessed a week ago.
Spot lump premium soars up on increased preference- Spot Lump premium stood at $0.3130/dmtu as against $0.1775/dmtu last week on increasing price support for lump premium due to tight coke and pellet supply.
Seaborne lump premium outlook has become increasingly bullish with rising demand and low port stocks. As per data compiled by SteelHome consultancy, lump inventory fell to 21.7 mn t as against 23.3 mn t towards last weekend.
Coking coal prices remain range-bound- Australian coking coal prices continued to remain largely steady because of a slowdown in demand before the year-end break as supply continued to outweigh demand.
Asian markets outside China witnessed a rather slow start to this year’s first trading week as end-users showed little urgency to book cargoes, leaving spot prices unchanged. Alongside limited spot demand from end-users in Europe, North Asia, and India, Chinese traders have been looking for reselling opportunities, thereby aggravating concerns of excess supply of Australia-originated premium coking coal.
Presently there are no fundamental changes in the Indian market for seaborne coking coal, with relatively stable demand. Some Indian buyers are keen to conclude spot deals over a better-performing steel market.
The latest offers for the Premium HCC grade are assessed at around $102.00/t FOB Australia, which was $102.50/t in the previous week.
China resumes ferrous scrap import bookings- Japanese scrap export market has remained active in recent bookings. A Chinese scrap trader has concluded a deal of 3,000 t of Japanese HS grade scrap. The deal was heard to have been concluded at $485/t CFR China basis. However, it is learnt that fresh offers are close to $500-505/t CFR levels.
Domestic billet prices rise on the week- This week, the billet prices in the Tangshan market (northeast China) settled with a rise of RMB 60 ($9.2), against last week. The prices of commonly traded Q235 billet 150mm diameter were reported at RMB 3,800/t ($589/t) in Tangshan, inclusive of 13 % VAT.
HRC export offers witness a spike on higher domestic prices- Chinese HRC producers went with a steep hike of up to $30/t w-o-w basis at $680-710/t FoB China in contrast with $670-680/t FoB basis a week back. Gains in the domestic market led to an increase in export offers. However, overseas buyers showed their buying-intent at around $665-675/t FoB basis.
The domestic market prices were reported at RMB 4,680-4,730/t (Eastern China) with an ascent of RMB 150-160/t w-o-w in contrast with RMB 4,530-4,570/t (Eastern China) a week back.
China’s major steel producer- Baosteel has released its flat steel product list prices for Feb ’21 delivery. The effective increase in HRC, CRC, and heavy-plates is around RMB 300-400/t.
Rebar export offers witness uptick- Rebar producers increased their offering range to $625-645/t FoB China against $632-638/t FoB basis a week back. The offers have continued to gain support on the back of rising raw material costs.
The offers quoted by Chinese rebar exporters are still competitive compared with other exporting countries, however, limited trades originated in the overseas market.
In the domestic market, prices witnessed a decent increase of RMB 120-130/t w-o-w basis and stood at RMB 4,080-4,120/t (Northern China) compared to RMB 3,950-4,000/t (Northern China) in the preceding week.
The domestic market traders kept their procurement rates low in anticipation of a drop in prices before restocking ahead of the Chinese New Year. Also, the cold wave forecast and falling temperatures hindered both construction and logistics in most parts of the country.
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