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China weekly: Steel prices fall amid weak market outlook

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BigMint Bureau

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13 May 2023, 16:12 IST

China weekly: Steel prices fall amid weak market outlook

China's steel prices came down this week amid the supply-demand imbalance and a weak market outlook. Moreover, falling raw material prices also weighed on steel prices. Steel exports from the country rose by 59.4% y-o-y to 7.93 million tonnes (mnt) in April due to subdued demand in the domestic market.

Product-wise sentiments-

1. Spot iron ore prices inch down w-o-w: Chinese spot iron ore fines Fe 62% prices stood at $103/t CNF China on 12 May, decreasing marginally by $1/t w-o-w, against $104/t CNF in the previous week. Prices dropped due to subdued steel demand in the domestic market. Meanwhile, falling iron ore futures also weighed on spot prices. According to SteelMint data, DCE iron ore futures decreased by RMB 25/t ($4/t) d-o-d to RMB 699/t ($101/t) on the last trading day.

According to SteelHome data, Iron ore inventory at major Chinese ports fell by 0.6 mnt to 129.2 mnt on 4 May compared to 129.8 mnt last week.

a) Spot pellet premium stable w-o-w: Spot pellet premium for Fe 65% grade pellets was assessed at $17.5/t, stable compared to the previous week.

b) Spot lump premium largely stable w-o-w: Spot lump premium stood at $0.14/dmtu, compared to 0.15/dmtu last week.

2. Coking coal prices up: Coking coal prices moved up by $2/t w-o-w to $242/t FOB from $240/t FOB last week. Prices increased on strong demand from India.

3. Billet prices fall w-o-w: Billet prices in China's Tangshan fell by RMB 70/t ($10/t) w-o-w to RMB 3,400/t ($489/t), including 13% VAT, on 12 May'23. Weak demand, volatility in rebar futures, falling finished steel, and raw material prices have weighed on billet prices. SHFE rebar futures stood at RMB 3,579/t ($514/t), a decrease of RMB 43/t ($6/t) w-o-w.

4. HRC export offers drop: China's HRC export offers dropped by $18/t w-o-w to $580/t FOB Rizhao as against $598/t FOB a week ago. Mills lowered prices amid subdued demand in the domestic market. Moreover, Baosteel lowered HRC prices by RMB 200/t ($29/t) m-o-m for Jun'23 sales. The company cut prices for the first time in five months.

Domestic HRC prices fell RMB 30/t ($4/t) w-o-w to RMB 3,690/t ($531/t) against RMB 3,720/t ($535/t) last week.

5. Domestic rebar prices inch up w-o-w: Chinese rebar prices inched up by RMB 10/t ($1/t) to RMB 3,730/t ($536/t) as against RMB 3,720/t ($535/t) last week. SHFE rebar futures (October 2023 contract) settled at RMB 3,608/t ($519/t), up RMB 27/t ($4/t) against RMB 3,581/t ($515/t) a week ago.

6. Shagang Steel cuts rebar prices for mid-May: Shagang Steel trimmed rebar prices by RMB 100/t ($14/t) while wire rod prices were kept unchanged for mid-May'23 sales. Effective prices-

Rebars (16-25 mm): RMB 4,000/t ($575/t)

Wire rods (6-10 mm): RMB 4,110/t ($591/t)

Coiled rebars (8-10 mm): RMB 4,200/t ($604/t)

All prices are ex-mill, including VAT.

Outlook: The improvement in the Chinese steel outlook still largely depends on market fundamentals. Prices won't increase significantly until steel supply and demand restores balance once again.