Weekly: Chinese steel market highlights

This week Chinese steel trades resumed in a full-fledged manner after the weeklong National day holidays. Thus domestic HRC and billet prices gained momentum. However, rebar prices remained stable.

Meanwhile Chinese finished steel exports increased by 5% m-o-m to 3.85 mn t in Sep '20 against 3.68 mn t in Aug'20. Chinese mills shifted their attention to overseas markets with domestic trades getting impacted by falling steel futures and rising inventories.

In addition to this nation's iron ore imports for the month of Sep'20 recorded at 108.55 mn t, an increase of 8% against 100.36 mnt in Aug'20. The clearing of Chinese port congestion favored imports for the month.

Nation's finished steel imports jumped by 30% m-o-m to 2.88 mn t in Sep'20 from 2.24 mn t in the previous month.

Chinese spot iron ore fines price decline- Chinese spot iron ore prices opened at $123.85/ t this week and dropped to $119.05/t towards the weekend amid softening demand. As per a few market participants, they expected stronger demand for Brazilian low alumina fines on environmental concerns.

However, higher portside inventories of Brazilian iron ore are expected to provide a buffer against higher prices. Brazilian iron ore producer Samarco plans to resume pellet production starting in December, initially close to an 8 mnt per year rate, as it works to implement new iron ore processing measures.

As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports increased to 124.5 mnt this week as against 123.6 mn t assessed a week ago.

Spot pellet premium up on tighter pollution control- Spot pellet premium for Fe 64% grade pellets assessed at $23.10 /t up against last week's prices at $ 17/t. The iron ore pellet prices continued to rise on the limited availability of forwarding spot cargoes and sintering restrictions. The sources expected stricter sintering controls to lift pellet usage and thus support pellet feed demand.

Spot lump premium down w-o-w- Spot lump premium witnessed at $ 0.0780/dmtu as compared to $ 0.0800/dmtu assessed last week. There is still an oversupply of a lump at Chinese ports due to global steelmakers cutting production as a result of the coronavirus pandemic. This has dampened seaborne buying interest, though a combination of steelmakers restoring output and planned winter production cuts in northern China's Tangshan may help premiums recover.

Coking coal prices slide downwards - Australian coking coal prices have fallen sharply over the week as demand sentiment weakened amid growing panic over the impact of coal import restrictions in China.

There are reports of China-bound coal-laden vessels being diverted elsewhere and Chinese customers deferring and canceling inbound shipments from Australia.

The rumored Chinese ban on Australian coal imports will inevitably reduce demand for Australian coking coal which may result in to fall in prices.

Indian market participants are cautiously observing the trend at this moment while awaiting clarification on the market uncertainties before taking new positions.

The latest offers for the Premium HCC grade are assessed at around $118.00/t FoB Australia. Last week the offers were at a $139/t FoB basis.

Domestic billet prices increase by RMB 20/t- This week, the billet prices in the Tangshan market (northeast China) settled with a sharp rise of RMB 20, against last week. The prices of commonly traded Q235 billet 150mm diameter were reported at RMB 3,390/t ($506/t) in Tangshan, inclusive of 13 % VAT. The Chinese bids for Non-ASEAN billets have been seen in the range of $425-430/t, CFR.

HRC export offers increased on higher domestic prices- The Chinese mills increased their offers by $10-15/t on the strengthening domestic market.

The current week assessed export offer stands at $510-515/t FoB China, compared with a $500-505/t FoB basis a week back.

Domestic HRC prices rose by RMB10/t to RMB 3,890-3,900/t (Eastern China) which was RMB 3880/t (Eastern China) last week. Prices mentioned above are inclusive of 13% VAT.

Rebar export offers move down marginally- Nation's export offers moved down marginally by $5/t w-o-w basis.

The current week rebar export offer was assessed at $480-490/t FoB China, which was $485-495/t FoB basis last week.

The domestic rebar prices remain stable at RMB 3,680-3,710/t (Eastern China) which was around RMB 3670-3700/t (Eastern China) last week. Prices mentioned above are inclusive of 13% VAT