This week Chinese steel prices have increased significantly on strong futures. SHFE rebar futures surged by RMB 125 and SHFE HRC rose by RMB 100 post-Lunar New Year holidays. However, as per yesterday’s closing the SHFE futures remained range-bound at RMB 4,524/t for Rebar and HRC at RMB 4,690/t
Also, the market buzz on export rebate cuts to 7% from 13% has resulted in higher steel prices.
The highlights are mentioned below:
1.China spot iron ore prices up during the week- Spot iron ore prices opened at $165.95/t and increased to $174/t levels on Thursday post-Chinese New Year holidays but later fell to $172.2/t towards the end of the week amid a decline in futures.
As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports was recorded at 128.65 mn t as against at 125.9 mn t assessed a week ago.
- Spot pellet premium down w-o-w- Spot pellet premium for Fe 65% grade pellets was assessed at $40.50/t down by $ 5.40/t. Chinese production levels are expected to remain strong post-holidays. As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports was recorded at 6.2mn t as against at 5.6 mn t assessed a week ago.
- Spot Lump premium- Spot Lump premium witnessed at $ 0.4290 this week. Demand supply mismatch has developed due to seasonal environmental curbs on iron ore sintering capacity in China. Thus, the supply crunch of pellets in China has led to additional lump demand.
2. Coking coal prices remained stable- Seaborne coking coal price has remained largely stable over the past week, as both sellers and buyers retreated to the side-lines in ex-China markets.
Overall market fundamentals remain generally negative with thin buying interest, as buyers turned cautious amid uncertainties over the near-term demand outlook.
The latest offers for the Premium HCC grade are assessed at around $138.00/t FoB, which was $139.00 FoB basis a week back.
3. Domestic billet prices open with a rise of RMB 210/t- As expected, the domestic billet prices in China witnessed a sharp rise post-Chinese New Year holidays (CNY). The rising Chines rebar futures pulled up the prices. According to SteelMint’s sources- the billet prices opened with a rise of RMB 210/t ($32.5/t) and reached RMB 4,060/t ($629.4/t) levels. While today, prices are at RMB 4,140/t ($641.2/t), ex Tangshan, including 13% VAT.
4. HRC export offer surges post-CNY-holidays- Chinese HRC manufacturers have steeply hiked export offers by $50/t and are currently offering HRC at $690-700/t FoB China. Offers prior to the CNY holidays stood at around $640-650/t FoB China basis. Chatter about the reduction in export rebate has kept sellers and buyer’s observant of the market situation.
Domestically, Hot rolled coil is being traded at RMB 4,680-4,720/t (Eastern China), which is higher by RMB 210-220/t contrasted against RMB 4,470-4,500/t (Eastern China) before the holidays. This is due to an increase in demand for white goods.
5. Rebar export offers on a rise post-holidays- Rebar producers have raised export offers to $653-655/t FoB China in comparison with pre-holiday levels which were around $620-650/t FoB China basis.
In the domestic market, rebar prices spiked up by RMB 210-220/t to RMB 4,330-4,370/t (Northern China) in contrast with pre-holiday offers of RMB 4,110-4,160/t (Northern China).
Investments in infrastructure and housing projects boosted market sentiments. Also, an increase in demand among contractors in the upcoming days may lend support to the price increase.
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