Chinese Steel Market Highlights- Week 44, 2019

This week, Chinese steel prices remained largely supported amid a slight drop in inventory on the imposition of production cuts. On 30 Oct, the Tangshan government has issued a notification stating that it has decided to re-initiate the grade II emergency response as part of its efforts to contain heavy polluting weather, that was to be brought into effect from 1 Nov'19.

Chinese Spot iron ore prices decline towards the weekend- Chinese spot iron ore prices opened up this week at USD 88/MT, CFR China and move down towards the end of this week at USD 85/MT, CFR China.

Weak Chinese demand and higher iron ore inventory at Chinese ports resulted in a decline in the seaborne iron ore prices. As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports stood at 131.65 MnT on 30 Oct'19.

The iron ore inventory last week reached almost 6 months high as the level was last witnessed towards the end of Apr'19 at 136 MnT.

Spot pellet premium inch down on a weekly basis- Spot pellet premium for Fe 65% grade pellets assessed at USD 22.1/MT, CFR China as against USD 23.6/MT, CFR China last week.

Spot lump premium declines towards the end of the week- Spot lump premium towards the end of this week moved down to USD 0.1900/DMTU as against 0.24/DMTU at the beginning of this week. As per market participants, demand for lumps remain supported
amid sintering cuts in China.

Weak overseas demand weighs on Coking Coal prices- Seaborne hard coking coal prices fell owing to weak overseas demand. Also, buyers are waiting for further clarity in prices.

Meanwhile, the Chinese spot market remains muted in the back of tightened restrictions at Southern China's Guangzhou and Fujian ports.

Several market sources predict that the seaborne coking market may soften further in November, particularly prices for the PLV segment. But in December, buying activity from China will possibly pick up with fresh import quotas for 2020.

The latest offers for the Premium HCC grade are assessed at around USD 145.00/MT FoB Australia fell by USD 7/MT as compared to USD 152.25/MT FoB basis in the previous week.

Domestic billet prices fell on a weekly basis- Chinese billet prices in the Tangshan region fell by RMB 30/MT to RMB 3,330/MT against RMB 3,360/MT against last week. The market sentiments are still low, however, lower inventory may lend some support.

Chinese HRC export offers moved up - This week, Chinese HRC export offers witnessed an increase of USD 5-10/MT.

Thus Chinese HRC export offers stand around USD 430-440/MT FoB China as against USD 425-430/MT FoB basis in the previous week.

However lucrative margins propelled Chinese traders to divert their inventories into the domestic market.

Domestic HRC prices continue to hover at RMB 3,500-3,520/MT Eastern China (Shanghai) unchanged over the previous week. Meanwhile, Chinese traders have been actively destocking to avoid losses in the winters when the seasonal slowdown hits the steel demand.

Domestic rebar prices moved up over lower inventories- Nation's rebar prices witness uptrend in the domestic market on the back of lower inventory levels in the domestic market.

Thus on a weekly basis, the domestic rebar prices stood at RMB 3,670-3,700/MT as compared to 3,580-3,610/MT (Eastern China) in the preceding week.

However, the nation's HRC export offers continue to remain steady over weak transactions. Rebar export offers stood at USD 450/MT as against USD 454/MT FoB China a week ago.

Tangshan govt announced production restrictions, suspending pelletization and sintering operations or halving production rates along with increased procurement rates ahead of winters lead to an upward thrust in domestic rebar prices.

Chinese Steel Market Highlights - Week 44,2019

Source- SteelMint Research