Weekly: Chinese Steel Market Highlights

The steel prices in the nation witnessed rebound this week with traders actively restocking the material over-improved demand in downstream industries. Also, the rise in the futures market pushed domestic steel prices. However domestic rebar prices moved down on higher inventories.

-- The HRC and Rebar export offer gained the momentum despite competitive offers from other exporting nations. Coking coal prices recovered moderately during the week. The domestic billet witness increase on a weekly basis. Also, iron ore prices increased towards the weekend

-- As per the recent data released by the National Bureau of Statistics (NBS), the nation's crude steel output increased by 8% to 85.03 MnT in Apr'20 as compared with 78.98 MnT in Mar'20.

Spot iron ore prices rise on supply concerns-

-- Chinese spot iron ore prices witnessed at USD 87.85/MT towards the beginning of the week and touched to USD 93.25/MT, CFR China towards the weekend.

--Prices witnessed sharp increase due to better demand and lower supply of material. The concerns over coronavirus have been impacting the Brazilian supplies of iron ore cargoes and the falling Chinese port inventories continue to exert upward pressure on the prices.

-- As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports dropped to 111. 95 MnT as against 112.95 MnT assessed a week ago.

Spot Pellet premium

-- Fe 65% grade pellets assessed at USD 19.40/MT this week moved down as against USD 25/MT, CFR China.

--The prices have dropped due to rising concerns over lower steel margins and hence the consecutive preference for medium and low-grade ore.

Spot Lump premium

--Prices stood at USD 0.1985/dmtu this week as against USD 0.1885/dmtu last week.

--There is a limited spread between pellet and lumps presently and with low steel margins, preference for a change in direct feed remains on the lower side.

Coking coal prices recover in recent deals to China-

-- The seaborne coking coal prices recovered modestly this week in recent deals by Chinese buyers.

-- There were several bookings being concluded to China, driven by restocking needs, reaction to Anglo American's Grosvenor incident, and expectations of further port restrictions ahead in the May-June period.

-- However, ex-China steelmakers, including in India, Japan, and South Korea, are heard to be looking at opportunities to resell their term volumes into the spot market. Further, certain steelmakers are negotiating with their suppliers to see if they could delay the delivery dates of contracted shipments.

-- The latest offers for the Premium HCC grade stood at USD 114.00/MT FoB Australia in comparison with USD 112.00/MT FoB basis a week ago.

Domestic billet prices move up on the week-

--Domestic billet prices in China are at RMB 3,160/MT ex Tangshan (including VAT), up to RMB 20, against last week.

HRC export prices up following domestic gains-

-- The nation's HRC export offers increased by USD 10-15/MT following gains in the domestic market. Also, better demand from the downstream industries on restocking needs resulted in an uptrend in prices.

-- Meanwhile, the domestic HRC prices have witnessed an increase by RMB 50-60/MT this week and stands at RMB 3,430-3,450/MT (Eastern China) compared with RMB 3,380-3,390/MT (Eastern China) a week ago.

-- Thus, the current assessed export offer stands at USD 415-420/MT FoB China as compared with USD 400-405/MT in the preceding week.

-- Also, the Chinese mills are actively sourcing imported HRC from India on cheaper offers. This week, a deal of 30,000 MT of HRC booked with a major Indian mill at USD 397-400/MT CFR China basis for June/July shipment.

--In the previous week China and Vietnam booked around 2,25,000 MT HRC at around USD 388-390/MT CFR basis.

Rebar export offer increases on a weekly basis-

-- Rebar export offers increased by around USD 4-12/MT this week.

--However, Chinese traders were less interested in overseas trades over better demand in the domestic market for the last couple of weeks.

-- Thus, currently, the export offer stands at USD 442-450/MT FoB China, which was USD 438-447/MT FoB basis in the preceding week.

-- Meanwhile, the domestic rebar prices declined by RMB 40-50/MT to stand at RMB 3,460-3,490/MT (Eastern China) as compared with USD 3,500-3,540/MT (Eastern China).

--The wait and watch approach attained by buyers ahead of the annual meeting of National People's Congress in Beijing on 22nd May and destocking requirement for traders weighed on domestic prices.

Source: SteelMint Research