Chinese steel market continued to record higher prices on bullish market sentiments amid a robust futures market and better demand through-out the industry channel.
HRC export offers kept moving up along with that of rebar on higher domestic prices. Iron ore price gained upward momentum in anticipation of increased steel production with the delay in the winter season. However, Australian coking coal prices witnessed a slight decline on reduced buying interest from Chinese importers.
Crude iron ore production fell by 4% and stood at 75.2 mn t in Nov’20 as against 78.4 mn t in Oct’20, according to the National Bureau of Statistics. During the eleven months of CY ’20 (Jan-Nov) the cumulative output stood at 790.4 mn t, up by 1% as against 783.7 mn t CPLY.
Chinese spot iron ore prices close higher- Chinese spot iron ore fines (Fe-62) price opened at $154.50/ t CFR China this week and increased to $164.15/t CFR basis towards the weekend. High-grade iron ore prices picked on steel production expected in the near-term in China amid delayed winters.
Demand for iron ore is expected to remain firm in China and may recover in other regions, including Japan and Europe, with the resumption of blast furnace capacity which was kept idle earlier this year due to the pandemic.
As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports recorded at 126.35 mn t this week as against 125.85 mn t assessed a week ago.
Spot pellet premium up on increasing demand and limited supplies- Spot pellet premium for Fe 65% grade pellets assessed at $ 29.7/t up against last week prices at $ 21.15/t.
Seaborne iron ore pellet prices jumped due to the limited availability of pellet cargoes. Sintering restrictions are expected to be supportive for pellet prices but they are unlikely to rise at the same rate as fines given the overall high fixed prices now.
Even with higher steel prices, the potential for margins to support iron ore prices and higher pellet premiums could be limited.
As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports dropped to 6.9 mn t this week as against 7 mn t assessed a week ago.
Spot lump premium moves up on the week- Spot lump premium witnessed at $ 0.1250/dmtu as against $ 0.1220/dmtu last week. Market participants saw increasing price support for seaborne lump premiums on improving lump liquidity at the port as well as rising prices for pellets.
Several Chinese end-users indicated that the South African lump was in higher demand due to as it being considered the best substitute for Indian pellets in small volumes.
Coking coal prices went down marginally on limited buying interest- Coking coal prices declined marginally this week because China is not importing coal from Australia. Most Australian coal miners predict that China will not resume imports of Australian coal in the first quarter of next year and are concerned that the ongoing ban will continue indefinitely.
Trading activities in the ex-China FoB market have slowed down toward the end of the year following the conclusion of a series of transactions in the past couple of weeks.
However seaborne coking coal CNF China price kept surging on stronger buying interest and the tight supply of non-Australian coking coals. The seaborne spot market saw transactions concluded at higher price levels to Chinese end-users on restocking needs as well as limited availability of domestic materials in China.
The latest offers for the Premium HCC grade are assessed at around $100.00/t FoB Australia, which was $101.50/t FoB basis a week ago.
Chinese domestic billet price up by RMB 10 ($1.5) w-o-w- This week, the billet prices in the Tangshan market (northeast China) settled with a rise of RMB 10 ($1.5), against last week. The prices of commonly traded Q235 billet 150mm diameter were reported at RMB 3,690/t ($564/t) in Tangshan, inclusive of 13 % VAT. The billet transactions were moderate, while the finished steel prices continue to pose an upward trend.
HRC export offers continue to soar on higher domestic prices- Steel manufacturers continued to increase their offers with a recent hike of $20-35/t this week. Higher demand, majorly from Vietnam, and a strong performing futures market remained the key factors. Also, mills are well booked to operate for the next couple of months at full capacity.
The current week assessed HRC export offer stands at $650-670/t FoB China, which was $630-635/t FoB basis a week back.
In similar lines, domestic HRC prices surged by RMB 80-90/t w-o-w and stand at RMB 4,620-4,640/t (Eastern China) in contrast with RMB 4,530-4,560/t (Eastern China). However, buyers seem concerned about the steep increases in price, which has led to few buyers opting for a wait and watch approach.
Rebar export offers spike by $50/t w-o-w- The Chinese mills continued to enjoy the price competitiveness even after a significant hike of $50/t and stood at $570-595/t FoB China. On the other hand, importers were bidding too low at $555-560/t FoB basis, leading to no deals.
Similarly, domestic market prices also went up by RMB 90/t w-o-w basis to RMB 3,930-3,960/t (Northern China) compared with RMB 3,840-3,870/t (Northern China) in the previous week. Higher demand and falling inventories kept the prices increasing.
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