Weekly: Chinese steel market highlights

This week nation's steel prices reported an increase on the back of currency appreciation against $ and strong futures market. Meanwhile, HRC export offers rose on domestic gains, and rebar export offers moved up by $5/t, on a weekly basis. Ample supplies weighed on coking coal prices, buying interest low from China and India.

China's crude iron ore output down 5% in Sep '20- China iron ore production for the month of Sep '20 recorded at 73.5 mn t, down 5% as against 77 mn t in Aug '20. The decline was due to a degrade in ROM quality as per reports.

Chinese spot iron ore price drops on low demand- Chinese spot iron ore prices fines (Fe 62%) opened at $119.4/ t this week and dropped to $115.55/t towards weekend amid thinning trade activities. The selling pressure and limited buying interests may continue to impact December laycan cargoes, as per traders. Yesterday, DCE iron ore futures fell by RMB 22 and SGX by $3.65, as per SteelMint's daily assessment.

As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports increased to 127.8 mn t this week as against 124.5 mn t assessed a week ago.

Spot pellet premium up w-o-w- Spot pellet premium for Fe 64% grade pellets assessed at $24.85 /t up against last week prices at $ 23.10/t. Sintering restrictions have boosted direct feed usage, with higher coke prices steering preference toward pellet over lump despite higher prices.

Spot Lump premium witnessed at $ 0.0780/dmtu stable w-o-w- There is still an oversupply of lump at Chinese ports due to global steelmakers cutting production as a result of the coronavirus pandemic. Market sources expected the high coke prices to constrain lump demand in the winter.

Coking coal prices weakened further amid ample supplies- Seaborne coking coal prices continued downward trend throughout this week on ample supplies and limited buying interest.

While Chinese steelmakers stayed on the sidelines awaiting clarity on port restrictions, ex-Chinese steelmakers showed no urgency to book cargoes in hopes that offers could fall further.

Oversupply concerns have emerged following deferrals and cancellations of pre-contracted coal shipments by some buyers in China, following the recently rumoured import ban.

Despite several November laycan cargoes of Australian premium coking coals being offered to India at competitive prices, there is not much incremental demand to liquidate the excess supply.

Latest offers for the Premium HCC grade are assessed at around $104.75/t FoB Australia, which was $118.00/t FoB basis a week ago.

Domestic billet price up by RMB 40 ($6) w-o-w- This week, the billet prices in the Tangshan market (northeast China) settled with a rise of RMB 40, against last week. The prices of commonly traded Q235 billet 150mm diameter were reported at RMB 3,430/t ($514/t) in Tangshan, inclusive of 13 % VAT. The Chinese bids for Non-ASEAN billets have seen in the range of $425-430/t, CFR.

HRC export offers on an uptrend with higher domestic prices- The Chinese mills increased their offers by $10-15/t on an uptrend in domestic prices amid strong futures.

Also, supply crunch with an increase in demand from a few importing nations and currency appreciation against $ pushed mills to offer on the higher side.

Also, the absence of Indian and Japan origin cargoes in Vietnam provides enough room for China to raise export prices.

The current week assessed export offer stands at $520-530/t FoB China, compared with a $510-515/t FoB basis a week back.

Domestic HRC prices rose by RMB 30/t to RMB 3,920-3,930/t (Eastern China) which was RMB 3,890-3,900/t (Eastern China) last week. Prices mentioned above are inclusive of 13% VAT.

Rebar export offers moved up on domestic market gains- Nation's export offers witnessed uptick by $5/t against the previous week. However, the bids from importers still remain low at $465/t FoB China, resulting in no trades.

The current week rebar export offer was assessed at $485-490/t FoB China, which was $480-490/t FoB basis last week.

Meanwhile, the domestic rebar prices also went up by RMB 30/t to RMB 3,710-3,740/t (Eastern China), which was around RMB 3,680-3,710/t (Eastern China) a week ago. Prices mentioned above are inclusive of 13% VAT.