Chinese Steel Market Highlights- Week 45, 2019

This week Chinese steel prices witnessed uptick. Strict production curbs ahead of winter season resulted to increase in domestic prices.

However, spot iron ore fines price touched 9 months low. Coking coal prices witnessed a decline over low buying interest from China. Chinese HRC export offers increased by USD 5/MT.

Eastern China's largest private ferrous scrap consumer and EAF steelmaker - Shagang Jiangsu Steel group has announced a price hike for all grades of domestic steel scrap procurement by a significant margin, increasing its purchase price by RMB 80/MT (USD 11) effective from 7th Nov'19. The price hike comes after 3 weeks of unchanged bids by the company.

Chinese finished steel exports fell by 10% to 4.782 MnT in Oct'19 as compared with 5.33 MnT in Sep' 19. And China's iron ore imports witnessed a 7% fall on a monthly premise compared to 99.36 MnT in Sep '19.

Chinese spot iron ore prices fell 9-months low- Chinese spot iron ore prices opened up this week at USD 82.7/MT, CFR China and dropped to USD 79.90/MT, CFR China towards the weekend. Falling Chinese demand and rising iron ore inventory has pulled down the prices. As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports increased to 131.75 MnT as against 131.65 MnT assessed towards the end of last week.

Spot pellet premium up marginally for the week- Spot pellet premium for Fe 65% grade pellets assessed at USD 24.15/MT, CFR China as against USD 22.1/MT, CFR China assessed last week. The approaching winter production curbs are expected to push pellet demand.

Spot lump premium picked up for the week- Spot lump premium towards the end of this week moved up to USD 0.2000/DMTU as compared to USD 0.1900/DMTU towards last week. Amid sintering cuts, demand for lumps remain supported. However, further increase in lump premium may inhibit lump usage in the blast furnace.

Coking coal price weakens over thin buying- Seaborne coking coal prices declined owing to ample stocks available with mills in China. Also, low buying interest resulted in weakening coking coal prices both in the domestic and global markets.

However, market participants are expecting coking coal prices to remain largely stable in the near term.

The latest offers for the Premium HCC grade are assessed at around USD 133.50/MT FoB Australia fell by USD 12/MT as against USD 145.00/MT FoB basis in the previous week.

Domestic billet prices remain stable on a weekly basis- Chinese billet prices in the Tangshan region remain stable on a weekly basis at RMB 3,330/MT.

Nation's HRC export offers inch up- China's HRC export offers increased slightly this week. Thus, currently, HRC export offers stood at USD 435-440/MT FoB basis, which was USD 430-435/MT in the preceding week.

Meanwhile, domestic HRC prices witnessed an uptick on a weekly basis. Domestic HRC prices stood at RMB 3,520-3,540/MT, up by RMB 20/MT over RMB 3,500-3,520/MT in the previous week.

Restocking activities ahead of the winter season and announced production cuts resulted in an uptrend in domestic prices.

China rebar export offers remain largely stable- Nation's rebar export offers stood largely stable this week as buyers have adopted a wait and watch mode.

Thus currently nation's rebar export offers stood around USD 450-455/MT FoB basis unchanged over the previous week.

Meanwhile, domestic rebar prices stood at RMB 3,700-3,740/MT, up by RMB 30-40/MT in contrast with RMB 3,670-3,700/MT in the previous week.

However, concerns over falling demand amid declining temperatures in the northern region may lead to a fall in rebar prices in the near term.

Source: SteelMint Research