Chinese Steel Market Highlights- Week 37, 2019

This week Chinese steel prices showed an uptick in the domestic market amid higher futures. However, the same failed to increase export offers amid reduced trades among overseas buyers.

HRC export offers continue to fall over low priced exports from India. Billet export offers also witness a slight decline despite an uptick in domestic prices. Rebar export offers moved up marginally on a weekly basis. Meanwhile, coking coal offers reduce further over fewer trades from China. However, spot iron ore prices increase following hike in futures.

According to the latest data released by Chinese customs, the nation's finished steel exports declined by 10% to 5.006 MnT in Aug'19 as compared with 5.57 MnT in Jul'19.

Also, Chinese major Baosteel announced a reduction in its HRC and Heavy plates by RMB 100/MT; however, it increased prices for carbon CR and HDGI by RMB 100/MT in its Baoshan, Meishan and Dongshan bases for Oct deliveries.

Meanwhile, the nation recorded a 4% rise in iron ore imports to 94.85 MnT in Aug'19 against July'19 imports at 91.02 MnT. The imports have hit 19- months high as the level was last witnessed in Jan'18 at 100.32 MnT.

Chinese spot iron ore prices rise on a weekly basis- Chinese spot iron ore prices opened up this week at USD 91.95/MT, CFR China and picked up to USD 99.1/MT, CFR China towards the weekend.

Hike in Spot iron ore prices is owing to end-users expectation to restock inventory before the national Day holidays scheduled in the month of October. Tight supply and higher prices at ports stimulate seaborne buying. Also, Vale's suspension works in one mining front of Brucutu mine, of Sao Goncalo, State of Minas Gerais favored prices for the week.

As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports decreased to 124.9 MnT as compared to 126.7 MnT a week ago.

Spot pellet premium moved down amid easing supply- Spot pellet premium for Fe 65% grade pellets assessed at USD 15.50/MT, CFR China as against USD 20.40/MT, CFR China a week before.

Pellet premium has witnessed a drop amid thin demand, easing supply from overseas market and preference for comparatively inexpensive lumps.

Spot lump premium up on a weekly basis- Spot lump premium, this week witnessed rise to USD 0.1260/MT as against USD 0.0950/DMTU assessed last week. The rise in price is attributed to recovery in lump demand.

Chinese domestic billet prices increase marginally- This week Chinese domestic billet prices in Tangshan settled at RMB 3,380/MT, up RMB 20 against RMB 3,360/MT at the end of last week. This week, billet trade sentiments in China were reported stable. Towards the weekend, trades remained weak amid holiday.

Chinese HRC export offers weighs down over competitive supply from India- This week Chinese HRC export offers were further reduced by USD 5-10/MT amid low buying interest from overseas buyers.

Since low priced export offers from India attract buyers based in Vietnam which in turn shows a continual decline in HRC export offers from China.

Currently, the nation's HRC export offers stood at USD 460-465/MT as against 465-475/MT FoB in the previous week.

However, on a weekly basis domestic HRC prices strengthened over strong futures Thus domestic HRC prices stood at RMB 3,680-3,710/MT in Eastern China (Shanghai) up by RMB 30-40/MT as against 3,650-3,670/MT in the previous week.

Thus increase in spot iron ore prices may increase HRC prices in the domestic market. Also restocking activities before National Day holidays can strengthen market sentiments in the domestic and export markets.

Chinese Rebar export offers uptick over a slight increase in domestic prices- This week Chinese Rebar export offers moved up marginally as the prices remain supported in the domestic market over reduced inventory. However, inactivity continues to prevail in the export market.

Currently, the nation's rebar export offers stood at USD 464-474/MT FoB China which was around USD 460-470/MT FoB basis last week.

Meanwhile, domestic rebar prices witness uptrend over traders restocking amid Mid-Autumn festival holidays scheduled at the weekend which fueled positivity in the market. Thus domestic rebar prices stood at RMB 3,650-3,680/MT (Eastern China) up by RMB 30/MT against RMB 3,620-3,650/MT (Eastern China) a week ago.

Chinese Steel Market Highlights- Week 37, 2019

Source: SteelMint Research