Chinese Steel Market Highlights- Week 32, 2019

This week Chinese steel prices reported significant decline owing to volatile futures amid intensifying US-China trade tensions and pessimistic market sentiments both in domestic and overseas market.

Nation's HRC and Rebar export offers witnessed fall over low buying from overseas buyers. Coking coal offers remain largely stable. Billet export offers also remain unchanged despite significant drop in domestic prices. However spot iron ore prices rose amid indications of production curbs in Tangshan region.

According to latest data released by Chinese customs, nation's finished steel exports in Jul'19 stood at 5.57 MnT, increased by 5% in comparison to 5.306 MnT in Jun'19.

Meanwhile China recorded 21% rise in iron ore imports to 91.02 MnT in July'19 against June'19 imports at 75.18 MnT. The imports rebounded for the month against hitting lowest level in June'19 since Feb'16.

Spot iron ore prices decline further on weekly basis- Chinese spot iron ore prices opened up this week at USD 99.15/MT, dropped to USD 94.8/MT towards weekend.

The drop is attributed to reduced demand, increased supply and lowered construction activities in China. Meanwhile Vale, world's largest iron ore miner resumed its Brucutu mines and Vargem Grande Complex easing global supply concerns.

As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports increased to 122.5 MnT as compared to 121.05 MnT a week ago.

Spot pellet premium up 11% W-o-W- Spot pellet premium for Fe 65% grade pellets assessed at USD 26.35/MT, CFR China as against USD 23.75/MT, CFR China a week before.

Pellet inventory at major Chinese ports witnessed drop to 4.9 MnT down on weekly basis compared to 5.1 MnT last week as preference for pellets have picked up amid extension of production cuts in Tangshan.

Spot lump premium fell on weekly basis- Spot lump premium this week declined to USD 0.1600/DMTU as against USD 0.1800/DMTU assessed last week.

The continuous fall in lump premium is expected to accelerate lump demand in the Chinese markets, and mills may consider changing blend ratio in the furnace.

Coking coal offers remain largely stable- Seaborne low-volatile hard coking coal prices have seen a slight recovery in this week. China-delivered prices have witness downside throughout this week and Indian buyers are hoping for improvement in trade activities over competitive prices.

Latest offers for the Premium HCC grade are assessed at around USD 160.00/MT FoB Australia.In the beginning of the week coking coal offers were heard at similiar levels.

China's domestic billet prices plunged on weekly basis- This week nation's domestic billet prices in Tangshan settled at RMB 3,500/MT, down by RMB 120/MT against previous week. Surge in billet imports kept domestic billet prices on lower side.

SteelMint has learned that, since July billet imports from Iran, Qatar and Azerbaijan have increased in Eastern China which have impacted domestic trade in the region.

In July, the quantity arrived was about 200,000 MT, including about 130,000 MT of slabs and about 70,000 MT of square billets. In August, it is estimated that the monthly arrival will be more than 200,000 MT, with billet and slab accounting for half respectively. It is hunched that some shipments are yet to schedule and could arrive in the coming time.

Affected by the fluctuation of the exchange rate, the current cost of imported steel billets from Iran is about RMB 3,590/MT, which is costlier than prevailing domestic offers in China.

Chinese HRC export offers inch down over low buying appetite- This week Chinese HRC exports offers slide down further by around USD 5/MT as pessimism continues to prevail in domestic and export market.

Meanwhile overseas buyers are bidding at lower levels in anticipation of further downside in prices.

Meanwhile intesifying US-China trade feud as nation proposed additional 10% tariff on USD 300 billion of Chinese imports effective from 1st Sep'19 resulted to bearish sentiments and downturn in steel prices.

Currently nation's HRC export offers stood at USD 495-505/MT as against 500-505/MT FoB in previous week.

On weekly basis domestic HRC prices in China stood at RMB 3,640-3,650/MT in Eastern China (Shanghai) plunged by RMB 120/MT which was RMB 3,760-3,770/MT in Eastern China (Shanghai) in previous week. Higher inventory levsls and weakening RMB pulled down HRC prices in domestic market.

Chinese rebar export offers continue to fall further- This week nation's rebar export offers witnessed marginal decline owing to weak end users demand and depreciation of RMB against USD which resulted to bearish sentiments both in domestic and overseas market.

On an average basis currently nation's rebar export offers stood at USD 500-505/MT FoB China which was around USD 505-510/MT FoB basis last week.

Meanwhile domestic rebar prices stood at RMB 3,650-3,680/MT (Eastern China) declined significantly by RMB 170/MT against RMB 3,820-3,850/MT (Eastern China) a week ago.

Chinese Steel Market Highlights- Week 32, 2019

Source: SteelMint Research