Chinese Steel Market Highlights- Week 49, 2018

This week Chinese steel market remained volatile as the domestic steel prices witness uptrend in beginning of the week amid indications of halt in US China trade war. Coking coal offers also showed slump on weekly basis. Meanwhile spot iron ore prices increased towards weekend.

As per reports,United States and China reached a 90-day ceasefire in a trade dispute. The breakthrough came after meeting between President Donald Trump and Chinese leader Xi Jinping at the Group of 20 summit in Buenos Aires. Trump has imposed import taxes on USD 250 billion in Chinese products - 25% on USD 50 billion worth and 10% on the other USD 200 billion. Trump had planned to raise the tariffs on the USD 200 billion to 25% if he couldn't get a deal with Xi.

Chinese finished steel exports in first eleven months of CY18 (Jan-Nov) stood at 63.91 MnT fell by 8% against 69.74 MnT in Jan-Nov'17.On monthly basis nation's finished steel export volume fell by 5% on monthly basis to 5.25 MnT in Nov'18 as compare to 5.5 MnT in Oct'18.

China's iron ore imports also moved down by 2% compared to 86.25 MnT in Nov'18. On yearly basis, imports have dropped 9% as against 94.5 MnT in Nov'17.

Chinese spot iron ore prices inched up towards weekend- Chinese spot iron ore prices prices opened up this week at USD 66.15/MT, CFR China and then increased to USD 67.6/MT, before falling to USD 66.95/MT, CFR towards the weekend. Amidst narrowing steel margins, mills have increased preference for lower grade ore over high grade ones.However tight supply of medium grade fines resulted to increased prices in early November.However softening demand for medium grade ore in China leads to fall in prices

Some mills preferred restocking in the week amid falling inventories. The Iron ore inventory at Chinese major ports reduced to 136.2 MnT against 137.85 MnT in previous week.

Spot lump premium remain stable on weekly basis - This week spot lump premium remain almost stable for the week at USD 0.3130/DMTU. However, Chinese mills increase preference for South African lumps during winter owing to its lower moisture content.

Spot pellet premium dropped on weekly basis-Spot pellet premium for Fe 65% grade pellets assessed at USD 46.55/DMT, CFR China this week, down by USD 2.60/DMT W-o-W against USD 49.15/DMT /DMT a week before. Buying interest for pellet still remains weak as it is more expensive compared to fines and lumps.

Coking coal prices plunged on weekly basis - Seaborne premium-grade coking coal prices from Australia witness downtrend by USD 8/MT on weekly basis.Meanwhile end users in China are not preferring seaborne coking coal amid temporary halt on imports and current port restrictions.Thus trading activity remain muted with no firm bids or offers heard from Chinese buyers.

Thus,premium HCC coking coal prices are heard around USD 227/MT FoB Australia.However in the beginning of the week the same was heard around USD 236/MT FoB basis.

Chinese mills book billet export orders - As per sources, Chinese mills have concluded around 100,000 MT billets to Taiwan and Philippines at USD 445-450/MT CFR levels (which is equivalent to USD 430-435/MT FOB) last week. No firm offers or deals have been reported this week as prices have bounced back on news of tariff negotiations between US-China. Chinese billet prices in domestic market was assessed at RMB 3,330/MT (ex-Tangshan), up 9% W-o-W.

Chinese HRC prices up in domestic market; export market still subdued- Chinese HRC export offers continued to remain on lower side after bouncing back in beginning of the week.However domestic prices witness uptrend towards the weekend in eastern region amid pause in USA China trade war.

Meanwhile prices of HRC in the domestic market moved up by RMB 60/MT on W-o-W basis.Presently domestic HRC is assessed at RMB 3,750-3,780/MT (ex-works) in Eastern China as compared to RMB 3,690-3,730/MT last week.

Meanwhile on the other hand HRC export offers from China move down on weekly basis and is assessed around USD 470-480/MT, FoB basis. However last week offers was assessed around USD 485-495/MT FoB basis.

Chinese Re-bar export offers fell further over pessimistic outlook-Nation's re-bar export offers fell further in line with weakening prices in domestic prices.Bearish sentiments and pessimistic outlook leads to further downside in rebar prices.

Currently, nation's re-bar export offers are at USD 485-490/MT FoB China.Last week rebar export offers was assessed at USD 495-500/MT FoB basis.

Domestic rebar prices fell by RMB 80/MT on weekly basis and is assessed at RMB 3,880-3920/MT in (Eastern China) as compared to RMB 3,960-4000/MT (Eastern China) in beginning of the week.

Chinese steel market Highlights - Week 49,2018

Source- SteelMint Research