Weekly: Chinese Steel Market Highlights

Chinese steel prices continued to remain volatile amid fluctuating futures. Meanwhile, HRC and Rebar export offer remained under pressure amid low priced imports from other exporting nations. Spot iron ore prices declined due to the gap between demand and supply. Coking coal prices moved down on a weekly basis on supply glut.

Spot iron ore price dropped for the week:
— Chinese spot iron ore prices opened up this week at USD 86.2/MT, CFR China, and dropped to USD 83.90/MT, CFR China towards the weekend. The prices fell amid increasing supply and falling Chinese demand. Also, with demand shifting from May loading cargoes to June loading cargoes led to continued pressure on iron ore prices.

— As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports dropped to 117.95 MnT as against 118.55 MnT assessed a week ago.

–The nation’s crude iron ore production aggregated to 187.9 MnT in Q1 CY20, down by 2% as against 192.3 MnT in Q1 CY19, according to the National Bureau of Statistics.

Spot pellet premium down  on increased supplies:
— Spot pellet premium for Fe 65% grade pellets assessed at USD 23.65/MT, CFR China as against USD 24.7/MT, CFR China last week. The pellet prices fell amid increasing supply in the Chinese market, and lower steel margins.

Spot lump premium witnesses continual decline on the week-
— Spot lump premium was seen at 0.1920/dmtu this week as against 0.2285/dmtu last week. The lump premium fell since traders shifted their interest for fines. Also, increasing the supply of pellet cargoes at Chinese ports pulled down the prices on decreasing cost-effectiveness as direct feed.

Coking coal prices slide further on low demand-
— Seaborne coking coal prices fell further this week, with steel mills outside of China struggling with depressed demand conditions amid the corona-virus pandemic. Further, several mining companies have been aggressively lowering their offers to regenerate buying interest in muted markets.

— In India lock-down may get extended amid Covid-19 infection continues to rise. Thus, restriction in port resulted in disruptions in shipments. Also, restrictions in transportation along with a shortage of labor resulted in bearish sentiments in the market.

— A few Indian buyers were heard to have started discussions with suppliers over the tentative cancellation of cargoes.

— The latest offers for the Premium HCC grade have been reported to be around USD 118.50/MT FoB Australia, down by USD 14/MT on a weekly basis in contrast with USD 132/MT FoB basis in the previous week.

Domestic billet prices stable on a weekly basis-
— The domestic billet prices in China are at RMB 3,070/MT ex Tangshan (including VAT) unchanged against last week. Meanwhile, billet import prices in China are currently hovering at USD 370-380/MT, CFR.

Nation’s HRC export offers continue to remain dull
— The nation’s HRC export offer fell by USD 5-10/MT on announced lock-down across the globe to battle against the pandemic.

— Thus, the current offer assessed at USD 400-405/MT FoB China, which was USD 405-410/MT FoB basis in the preceding week.

–Also, competitive offers from India, Russia, South Korea, and Japan continue to weigh on nation’s HRC export offers

-Meanwhile, Chinese steel mills are aggressively importing HRC from South Korea. Major South Korean mill Hyundai steel booked 20,000 MT of HRC (SS400) to China this week at USD 400/MT CFR basis.

–However, easing of a lock-down in Vietnam may fuel optimistic sentiments in the export market.

— Meanwhile, the domestic HRC prices remained under pressure on cheaper imports. This week domestic HRC prices reported decline by RMB 40-50/MT and stood at RMB 3,280-3,300/MT (Eastern China) as compared to RMB 3,330-3,340/MT (Eastern China) a week ago.

Rebar export offers moved up slightly
— The nation’s rebar export offers moved up marginally as the  domestic demand gained the momentum.

— Hence, the assessed offer range for Rebar export was USD 438-447/MT FoB China in comparison with USD 435-445/MT FoB China in the previous week.

— Meanwhile, the domestic Rebar prices went down by RMB 30/MT on a weekly basis to RMB 3,420-3,450/MT (Eastern China) as compared to RMB 3,450-3,480/MT (Eastern China) a week ago.

Source- SteelMint Research