This week, Chinese steel prices witnessed a surge on the back of strong downstream demand. Also, a recent announcement on production curbs by Tangshan Govt. at the major steelmaking hub of the nation resulted in a hike in steel prices.
Input materials viz. iron ore, pellet, billet, etc. as well as finished steel prices recorded a sharp increase this week. However, coking coal prices fell marginally.
Product-wise market sentiments are mentioned below-
1. China spot iron ore prices stable during the week- Spot iron ore prices opened at $167.7/t, CFR China and later dropped to $164.75/t, CFR China mid-week. Iron ore prices continued to trend lower, as stricter production curbs in China’s Tangshan region dampened buying interest. Four more mills were downgraded in terms of their emission category. These four Tangshan steel mills have been downgraded to grade D, which means they might need to cut 50% emissions when the next round of emergency response comes in.
Prices increased to $167/t, CFR China towards the weekend as healthy steel demand and margins led to renewed buying interest. Most of Tangshan mills maintained their iron ore blends during the production curbs. However, many mills outside Tangshan were heard to have increased the ratio of higher-grade materials in their blends, to maximize productivity given the strong steel margins.
As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports were recorded at 134.35 mn t as against at 133.65 mn t assessed a week ago.
- Spot pellet premium up w-o-w- Spot pellet premium for Fe 65% grade pellets was assessed at $64.65/t up by $3.70/t.
Seaborne iron ore pellet premiums picked up on continued demand. Steelmakers are likely to increase their utilization of pellets given their attractive value-in-use in comparison to sinter feed. The ongoing environmental controls in Tangshan supported demand for higher Fe raw materials.
As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports was recorded at 5.25 mn t as against 5.2 mn t assessed a week ago.
- Spot lump premium w-o-w- Spot Lump premium was witnessed at $0.5375/dmtu as against $ 0.5425/dmtu assessed last week. Lump premiums were seen to be under stronger selling pressure, as sellers were discounting their premiums for fines to sell co-loaded cargoes. Lump was still in good demand at the port, but weaker expectations in May are pressuring some sellers to lower their offer levels.
2. Coking coal prices fell w-o-w- Seaborne coking coal prices continued their downtrend amid ample availability in the ex-China market on lower price indications and relatively fewer bids.
The latest offers for the Premium HCC grade are assessed at around $112.50/t FoB Australia, as against $111.50/t FoB basis a week ago.
3. Chinese domestic billet prices hit over 12-year high levels- The domestic billet prices in Tangshan have hit over 12-year high levels. Mills in Tangshan are reeling under the impact of the strict implementation of emission cuts by 30-50%. However, the demand from downstream remained vibrant. The prices of commonly traded Q235 billet 150mm diameter was reported at RMB 4,960/t ($756/t) ex Tangshan, including 13% VAT, up by RMB 250 ($38) w-o-w.
4. HRC export offers spike on higher domestic prices- The export offer for the week stands at around $820-840/t FoB China, up by $55-70/t w-o-w in contrast with $765-770/t FoB basis a week ago. Chinese mills have resumed export offers at the higher end with a clause that loss in case of export rebate changes shall be borne solely by the buyers. Meanwhile, marine freight rates have been rising which ultimately adds to the export offer.
In the domestic market prices during the week touched 13-year high levels to RMB 5,460-5,520/t (Eastern China), increasing by RMB 360-370/t w-o-w as against RMB 5,100-5,150/t (Eastern China) in the previous week. The surge in price is due to production restrictions enforced by the Tangshan Government followed by robust downstream demand and strong future gains.
5.Domestic rebar offer hits 12.5-year high level over strong demand- During the week, rebar prices hit a 12.5-year high to RMB 4,980-5,000/t (Northern China), surging by RMB 320/t in comparison with last week’s price of RMB 4,660-4,680/ t (Northern China). Strong demand from the construction sector along with higher rebar futures kept the prices high.
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