China weekly: Steel prices rise post-Lunar New Year holidays on improved demand

Chinese steel prices witnessed an upward trend on improved demand as market activities resumed after a week-long Lunar New year holidays.

The world's largest steel producer Baosteel announced a price hike of RMB 300-350/t ($47-55/t) m-o-m for its various steel products for Mar'22 bookings. HRC, sheet and heavy plate prices increased by RMB 350/t ($55/t) while those of CRC and hot dipped galvanised rose by RMB 300/t ($47/t). Global price upsurge and higher raw material prices pushed up domestic offers.

China's Shagang Steel hiked construction steel prices by RMB 100/t ($16/t) for mid-Feb'22. The revised offer for rebar (16-25 mm) stands at RMB 5,100/t ($802/t) and wire rod (6-10 mm) at RMB 5,310/t ($835/t). Prices are exw, including taxes.

Product-wise sentiments:
1. China spot iron ore prices drop towards weekend:?Chinese spot iron ore fines Fe 62% prices opened at $149.40/t CNF China for the week and assessed at $150.15/t, CNF China towards the weekend after rising to $154/t towards mid-week. Seaborne iron ore prices rose on 10 Feb'22 on positive steel demand outlook.

Despite the bullish outlook, offer levels were heard lower due to less liquidity in the market as buyers were cautious, several sources said.

Iron ore inventory at major Chinese ports stood at 155.4 mnt this week, up 1.35 mnt as against 154.05 mnt a week ago, as per data maintained by SteelHome.

a) Spot pellet premium down w-o-w: Spot pellet premium for Fe 65% grade pellets was assessed at $55/t, down against $59.15/t last week.

b) Spot lump premium up w-o-w:?Spot lump premium stood at $0.3450/dmtu, against $0.3120/dmtu last week.

2. Coking coal prices down $6/t: Australian coking coal prices fell by $6/t w-o-w basis in tandem with the drop in demand especially from India.

The latest price for premium HCC grade is assessed at around $439/t FOB Australia basis, as against $445/t FOB before the holidays.

3. China's billets price rise towards weekend: Steel billet prices in China's Tangshan witnessed a sharp rise of RMB 240/t ($38/t) against the closing on 28 Jan'22 before the Chinese New Year holidays. Domestic billets prices stood at RMB 4,740/t ($746/t), inclusive of 13% VAT, on 11 Feb'22.

According to data maintained with SteelMint, the Chinese SHFE rebar futures contract for May'22 delivery closed at RMB 4,905/t ($772/t) on 11 Feb'22, a significant w-o-w rise of RMB 76/t ($12/t).

4. HRC export offers rise up to $50/t post holidays: Chinese mills raised their HRC export offers post the Lunar New Year holidays. Current offers are at $800-830/t FOB China, up by almost $30-50/t as against $770-780/t FOB before the holidays.

In the domestic market, HRC prices rose RMB 190-200/t ($30-31/t) to RMB 5,120-5,140/t ($806-809/t) eastern China compared to RMB 4,920-4,950/t ($774-779/t) eastern China as assesed on 28 Jan'22.

Decline in production led to lower inventories amidst strong demand which lent support to prices. In addition, SHFE HRC futures for May'22 contracts rose RMB 86/t w-o-w to RMB 4,967/t as assessed on 11 Feb'22.

5. Domestic rebar offers up: Domestic rebar prices climbed RMB 120-130/t ($19-20/t) to RMB 4,930-4,960/t ($776-781/t) northern China in comparison with RMB 4,800-4,840/t ($755-762/t) northern China before the holidays. Pent-up demand post-the holidays coupled with gains in rebar futures led to higher prices.