Weekly: Chinese Steel Market Highlights

This week Chinese steel prices witnessed downside along with the fall in export offers due to lockdown in various global nations to prevent further spread of the COVID-19. This consequently fueled pessimistic sentiments in the steel market.

— Chinese HRC export offers plunged amid low priced exports from India. Lower bids from importers continued to weigh on rebar export offers. However, iron ore prices increased slightly. Coking coal offers witnessed significant fall over low demand.

Spot iron ore prices up marginally on tight supplies-

— Chinese spot iron ore prices opened up this week at USD 82.55/MT, CFR China and increased to USD 82.65/MT, CFR China towards the weekend due to a rebound in construction demand. However, steel margins did not witness improvement. The prices during the week improved to USD 83.7/MT, CFR China and dropped towards the end of the week due to improved supplies from Australia.

— Brazil’s National Mining Agency (ANM) as on Thursday (2nd Apr) halted operations at 47 mining dams that failed to certify stability criteria, which includes about 25 dams of Vale SA.

— As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports reduced to 118.65 MnT as of 4th Apr as against 121.15 MnT assessed a week ago.

Spot pellet premium up W-o-W-

— Spot pellet premium for Fe 65% grade pellets assessed at USD 31/MT, CFR China this week as compared to USD 29.85/MT, CFR China last week. The domestic pellet is being considered a possibly less expensive direct feed by end-users.

Spot Lump premium down W-o-W-

–Spot Lump premium for the week witnessed at 0.2750/dmtu against 0.2960/dmtu towards last weekend. The lump premiums witnessed increasing pressure following a resumption of domestic concentrate production and less stringent regulations.

Coking Coal prices decline on mute buying-

— Seaborne coking coal prices fell this week on the back of production cuts and lockdowns across all major steel-producing nations.

– In China, lower offers for several brands of Australian premium medium-volatile coking coal were seen in the market, although the majority of the buyers stayed on the sidelines with the expectation that prices could drop further.

— Latest offers for the Premium HCC grade are assessed at around USD 138 /MT FoB Australia down by USD 14/MT which was USD 152/MT FoB basis a week ago.

Low priced imports weighed on domestic billet prices-

— China continued importing billets from Russia, India, and Vietnam. The billet import offers in China are at USD 360-365/MT, CFR levels.

— Meanwhile, the domestic billet prices in China are at RMB 3000/MT ex Tangshan, including VAT, down RMB 80 against last week.

HRC export offers declined following a slump in domestic prices-

— The lockdown announced in major steel-producing nations to halt the spread of COVID-19 has disturbed the buying patterns and resulted in bearish sentiments in the domestic and export market. However, China has recovered from this, but the lockdown in other nations are restricting trade activities from China.

Along with this, cheaper HRC export offers from India to Vietnam continue to weigh on Chinese prices.

— On a weekly basis nation’s HRC export offers went down by USD 10-15/MT. The current HRC offer stands at USD 410-415/MT FoB China, which was USD 425-430/MT FoB basis a week ago.

— Meanwhile, domestic prices plunged by RMB 140/MT to RMB 3,190-3,210/MT (Eastern China) compared with RMB 3,330-3,350/MT (Eastern China).

Rebar export offers moved down slightly W-o-W-

— The nation’s rebar export offers declined marginally by USD 5/MT amid competitive offers from other major exporting nations.

–However, the gradual increase in the local demand, better realizations, and improved profit margin shifted the focus of Chinese steelmakers to the domestic market.

— Current Rebar export offer assessed at USD 435-445/MT FoB China in comparison with 440-450/MT FoB basis in the previous week. Meanwhile, the importers continue to bid one lower side at USD 410-420/MT FoB China basis.

— The domestic prices declined by RMB 60-80/MT to RMB 3,390-3,420/MT (Eastern China) when compared with RMB 3,470-3,500/MT (Eastern China).

Source: SteelMint Research