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China weekly: Steel prices rise ahead of holidays on favourable govt polices

Chinese steel prices increased over the week, with both crude steel production and inventory levels declining w-o-w. The increase can be attributed to favourable policies...

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16 Sep 2023, 16:58 IST
China weekly: Steel prices rise ahead of holidays on favourable govt polices

Chinese steel prices increased over the week, with both crude steel production and inventory levels declining w-o-w. The increase can be attributed to favourable policies of the government for the property sector along with the release of data by the National Bureau of Statistics reflecting some recovery in the economy.

The average daily crude steel output of CISA-affiliated mills stood at 2.159 mnt in early September, up 5.53% from 2.046 mnt in late-August. Also, output marginally increased by 0.32% m-o-m against 2.152 mnt in early August.

Meanwhile, total steel inventory at China Iron and Steel Association (CISA)-affiliated mills increased by 1.079 million tonnes (mnt), or 7.33%, to 15.803 mnt in early September compared with 14.725 mnt in late August. However, inventories fell by 248,400 tonnes (t), or 1.55%, m-o-m as against 16.051 mnt in early August.

Product-wise sentiments

1) China spot iron ore prices rise w-o-w: Chinese spot iron ore fines Fe 62% prices stood at $125.6/t CNF China, up by $8.8/t w-o-w on 15 September. Iron ore prices rose owing to sustained strong buying demand, stronger Chinese macroeconomic data, and many deals recorded on both seaborne and portside markets. There are no big import margins for September cargoes right now, so it makes little sense to import them when there is considerable availability at the port.

According to SteelHome data, iron ore inventory at major Chinese ports increased by 2.3 mnt to 113.6 mnt on 14 September compared to last week.

a) Spot pellet premium stable w-o-w: Spot pellet premium for Fe 65% grade pellets remained stable w-o-w at $19.6/t on 13 September.

b) Spot lump premium rise w-o-w: Spot lump premium fell by $0.0135 w-o-w to $0.1700/dmtu on 15 September.

2. Coking coal prices rise: Coking coal prices rose by 14% w-o-w to $315/t FOB on 8 September amid limited availability of material and suspension of operations at a few mines in Queensland, Australia.

3. Billet prices rise w-o-w: Billet prices in China's Tangshan witnessed an increase of RMB 20/t ($3/t) to RMB 3,570/t ($483/t), including 13% VAT, on 15 September. Meanwhile, China's SHFE rebar futures stood at RMB 3,824/t ($506/t), a rise of RMB 107/t ($8/t), w-o-w, on 15 September.

4. HRC prices edge up: Domestic HRC prices edged up by RMB 10/t ($1/t) w-o-w to RMB 3,900/t ($536/t) against RMB 3,890/t ($535/t) last week. Market participants opined that production cuts along with favourable government policies might boost domestic demand for steel. The settled price of SHFE HRC futures (January contract) rose by RMB 49/t ($7/t) w-o-w to RMB 3,892/t ($535/t) on 15 September as against RMB 3,843/t ($528/t) last week. China's HRC export offers fell by $3/t w-o-w to $555/t FOB Rizhao. The mills had tried to increase prices but resistance from other market participants was observed.

5. Rebar prices increase: Chinese rebar prices increased by RMB 80/t ($11/t) w-o-w to RMB 3,760/t ($517/t) on 15 September as against RMB 3,680/t ($506/t) a week ago. SHFE rebar futures (January contract) settled at RMB 3,817/t ($525/t) on 15 September, up RMB 60/t ($8/t) w-o-w. The implementation of a range of support measures for the property sector, combined with the easing of monetary policies by Chinese authorities in late August, had a positive effect on sentiment and steel market outlook.

Outlook: The steel market continues to rise boosted by the central bank's reserve requirement ratio reduction and expectations of phased supply-side reductions. Market sentiment is strong and traders are actively exploring the upside. Demand is expected to strengthen in September ahead of the Golden Autumn and National Day holidays, SteelMint notes.

16 Sep 2023, 16:58 IST

 

 

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