Weekly: Chinese Steel Market Highlights

This week domestic steel prices remained largely stable due to the Labour Day holidays from 1st May until 5th May. Meanwhile, HRC and Rebar’s export offer remained range-bound. Spot iron ore prices picked up, however, coking coal prices continued to slump further on limited inquiries.

Spot iron ore prices picked up during the week-

–Chinese spot iron ore prices opened up this week at USD 83.4/MT, CFR China and picked up to USD 83.95/MT, CFR China towards the weekend.

–Iron ore supply cuts due to lockdown are partially softening the impact of steel production cuts, which in turn, provided support to prices. Thus spot iron ore prices are expected to continue a volatile trend in Q2 CY’20. However, amid thin margins, steelmakers have increased usage of mid and low-grade fines.

–As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports dropped to 115.65 MnT as against 117.95 MnT assessed a week ago.

Spot pellet premium up 11% W-o-W-

–Spot pellet premium for Fe 65% grade pellets assessed at USD 26.35/MT, CFR China as against USD 23.65/MT, CFR China last week. However, buying remained limited during the week ahead of Labor holidays.

Spot Lump premium fell on increased preference to pellets-

–Spot lump premium stood at 0.1885/dmtu this week, against 0.1920/dmtu in the previous week. The lump premium fell this week since traders have shifted their interest for fines. Further, increasing supply of pellet cargoes at Chinese ports pulled down the prices on decreasing cost-effectiveness as direct feed.

Domestic billet prices moved up marginally-

— The domestic billet prices in China are at RMB 3,080/MT ex Tangshan (including VAT), up by RMB 10, against last week. Meanwhile, billet import prices in China are currently at USD 365-375/MT, CFR.

Coking coal prices continue to slump further on globally weak demand-

–Australian coking coal prices witnessed further downward trend this week amid subdued demand persists globally amid multiple lockdowns across numerous countries due to pandemic.

–China is the only viable market in Asia for spot sales of Australian-origin coking coal however the Chinese buyers have largely remained on the side-lines with expectations of further fall in prices in the near-term.

–Indian spot demand for seaborne coking coal continued to remain mute following the enforcement of the nationwide lockdown effective from March 25, and now extended until May 17.

–The latest offers for the Premium HCC grade are assessed have been reported at around USD 109.00/MT FoB Australia which was USD 118.50 FoB basis last week.

Nation’s HRC export offers remained range-bound-

— The nation’s HRC export offers remained range-bound on the back of improved sentiments with the easing lockdown restrictions in Vietnam. However, competitive offers from India, Russia, South Korea, and Japan keep the export offers on the lower side.

— Thus, the current offer assessed at USD 400-403/MT FoB China, which was USD 400-405/MT FoB basis in the preceding week.

— Meanwhile, the Chinese importers have increased their appetite for imports amid competitive offers from India, South Korea and Japan. Nation has booked decent volumes from Indian and South Korea. Also last week Chinese steel mill booked around 30,000-40,000 MT from an Indian manufacturer at USD 390-393/MT CFR China.

— Further, the domestic prices reported a marginal decline by RMB 10/MT and stood at RMB 3,270-3,300/MT (Eastern China) as compared to RMB 3,280-3,300/MT (Eastern China) a week ago.

Rebar export offer remains stable-

— Lower bids and slow demand from major importing nations in the midst of lockdowns over COVID-19 concerns, kept the sentiments weak in the overseas market. However, the nation’s rebar export offers remained rangebound due to labour day holidays from 1st to 5th May.

— Currently, rebar export offers stood at USD 437-445/MT FoB China in comparison with USD 438-447/MT FoB China in the previous week.

— Meanwhile, domestic rebar prices moved down slightly by RMB 10/MT and stood at RMB 3,410-3,440/MT (Eastern China) as compared to RMB 3,420-3,450/MT (Eastern China) a week ago.

Source: SteelMint Research