Weekly: China Steel Market Highlights

This week Chinese steel prices remained largely stable since the Chinese steelmakers have suspended their trade activities ahead of the Lunar New Year holidays. Also, the Coronavirus outbreak fueled pessimism in the domestic market. Thus, buyers remain concerned about the delay in resumption of activities post the holidays.

HRC export offers remain firm following stability in domestic prices. Rebar export offers also remain unchanged amid buyers holding decent inventories at the moment. Spot iron ore prices fell this week. However, coking coal offers moved up.

China has recorded crude iron ore production at 858.9 MnT in CY19, up 8% as against 793.04 MnT in CY18. On a monthly premise, output recorded at 75.18 MnT in Dec'19, down by 5% as against 79.25 MnT in Nov'19.

Spot iron ore prices down during the week- Chinese spot iron ore prices opened up this week at USD 95.85/MT CFR China and dropped to USD 92.05/MT CFR China towards the weekend. The China coronavirus breakout could delay the spring restart of construction projects and may pull down the prices further. As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports dropped to 127.05 MnT as of 22nd Jan'20 as against 127.35 MnT assessed a week before.

Spot pellet premium increased 18% W-o-W- Spot pellet premium for Fe 65% grade pellets assessed at USD 35.5/MT CFR China as against USD 29.9/MT CFR China last week. The prices improved amid tight material supply amid ongoing sintering controls. However, the rising prices of the pellet may soon reach the saturation level, and end-users are expected to change the utilization rate of pellets towards Feb'20. Pellet inventory at major ports dropped to 4.1 MnT as on 22nd Jan, down 0.2 MnT W-o-W against 4.3 MnT last week.

Sport lump premium remain unaltered W-o-W- Spot Lump premium for the week stood stable at USD 0.2600/dmtu W-o-W. Few traders depicted interest for Feb cargoes co loaded with fines and lumps. As per sources, the lump premium may face downward pressure post the Lunar new year holidays on expectations of looser sintering controls.

Coking coal offers to remain stable this week- Seaborne coking coal offer is expected to remain stable in the upcoming week until the resumption of trades after the holidays.

Meanwhile, Chinese steel markets and coke plants are seeing positive margins at the moment, but it's hard to gauge the market direction after the Lunar New Year celebrations.

Also, coking coal prices inched up on a weekly premise. The latest offers for the Premium HCC grade assessed at around USD 153.00/MT FoB Australia, which was USD 152.50/MT FoB basis a week ago.

Chinese domestic billet prices stable W-o-W- Chinese domestic billet price remains settled at RMB 3,300/MT against the preceding week. The market sentiments in the country were reported weak with the start of the New Year holidays.

China HRC export offers stable amid fewer inquiries- The Chinese HRC export offers remain unchanged this week amid limited inquiries owing to ongoing Lunar New Year holidays.

Also, the Vietnamese buyers remain inactive amid Tet holidays, which kept the nation's HRC export offers largely stable. However, it is anticipated that Chinese HRC export offers will gain momentum as the Chinese steelmakers resume to market post-holidays.

Thus, the current HRC export offer continues to hover at USD 500-505/MT FoB China.

Meanwhile, the domestic HRC prices stood at RMB 3,860-3,880/MT (Eastern China), stable against the previous week's prices.

China Rebar export offer remained unaltered W-o-W- The Rebar export offers too remained firm this week. Meanwhile, the overseas buyers holding decent inventories refrained themselves from booking new orders and have adopted a wait and watch approach.

Hence, the current Rebar export offers on a weekly comparison stood at USD 470-475/MT FoB China.

Meanwhile, the domestic market prices hovered at RMB 3,640-3,670/MT (Eastern China), unchanged over the previous week.

However, post-holidays, the demand may improve over increased buying in the domestic market.

Source: SteelMint Research