Chinese Steel Market Highlights- Week 50, 2019

This week Chinese steel prices exhibited mixed response as domestic HRC prices gained momentum over surge in logistics cost. On the other hand, rebar prices remained largely stable and billet prices went down over limited trade activities due to the ongoing winter season.

Meanwhile, the nation's HRC export offers showed an upward trend following an increase in domestic prices, however domestic billet offers fell. Spot iron ore prices climbed amid restocking by mills. Coking coal prices inched up on a weekly premise over an improved demand from China.

Further, China's top steelmaking city- Tangshan has issued a notice to reinitiate the grade II emergency response to heavy polluting weather, as the city declared a level 2 pollution emergency. For mills undertaking the heating task on the basis of emission reduction meant for orange grade precaution, an addition of 20% production limit will be added on sintering machines, pelletizing equipment, and lime kilns.

Baosteel hiked its HR Coil prices by RMB 200/MT, plain carbon CR coils by RMB 100/MT, along with HDGI, and PPGI prices by RMB 50/MT for Jan-Feb'20 deliveries.

As per custom data released this month, China's finished steel exports hit nine months low and stood at 4.58 MnT in Nov'19, fell by 4% M-o-M as compared to 4.782 MnT in Oct' 19. Before this, the lowest seen was in the month of Feb'19 at 4.51 MnT.

Meanwhile, the nation's iron ore and pellet imports at 90.65 MnT in Nov'19, witnessed a slight fall of 2% on an M-o-M basis as compared to 92.86 MnT in Oct'19 according to General Administration of Customs. The decline in imports is attributed to falling shipment from major miners.

Chinese spot iron ore prices up during the week- Chinese spot iron ore prices opened up this week at USD 94.35/MT CFR China and picked up to USD 94.45/MT CFR basis towards the weekend.

The prices have crossed USD 94/MT, CFR China for the week, depicting 2 months high as it was last witnessed at USD 94/MT two months back towards early Oct '19. The hike is attributed to Chinese steel mills restocking iron ore before the upcoming holidays, and prices are likely to remain supported in the near short term.

As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports dropped to 127.6 MnT as against 129.5 MnT assessed towards the end of last week.

Spot pellet premium down W-o-W- Spot pellet premium for Fe 65% grade pellets dropped to USD 23.6/MT CFR China as against USD 25.7/dmt CFR China assessed last week. The demand for imported pellets remained supported in China amid tightening domestic supply. Also, Pellet inventory fall W-o-W to 6 MnT against 6.5 MnT a week ago, depicting rising pellet demand following winter production curbs.

Spot lump premium fall W-o-W basis- Spot Lump premium for the week fell to USD 0.2500/dmtu as compared to USD 0.2600/dmtu last week.

Coking coal prices inch up over improved demand from China- This week, coking coal offers witnesses a marginal increase on the back of increased bookings from Chinese suppliers. The latest offers for the Premium HCC grade assessed at around USD 136.50/MT FOB Australia.

Meanwhile, domestic miners are confident that prices will remain unchanged in the first quarter of the New Year.

Domestic billet prices decline W-o-W- Chinese domestic billet market settled at RMB 3,390/MT, down RMB 70/MT against last week. The market sentiments in the country were reported weak.

Chinese HRC export offers move up following an increase in domestic prices- This week, the nation's HRC export offers moved up on the back of bolstering domestic prices. Also, restocking demand ahead of the Chinese New Year holidays boosted prices both in the overseas and domestic markets.

Hence, the current HRC export offer stands at USD 470-475/MT FoB China as compared to USD 465-470/MT FoB basis in the preceding week.

The domestic HRC prices surged by RMB 120/MT W-o-W basis to RMB 3,880-3,890/MT (Eastern China), which was RMB 3,760-3,770/MT a week ago.

The nation-wide supply shortage owing to the logistics restraint, along with announced blast furnace production restrictions till 10 Dec'19, keeps the domestic HRC prices bolstered.

Chinese rebar export offers inch down on a weekly premise- The nation's rebar export offer widened downward by USD 5/MT W-o-W basis.

Thus, the effective rebar export offer hover around USD 470-480/MT FoB China in comparison with USD 475-480/MT a week ago.

The domestic rebar offers continued to hover at RMB 3,870-3,900/MT (Eastern China), stable over last week owing to lower demand, and increased rebar production.

Chinese Steel Market Highlights- Week 50, 2019

Source: SteelMint Research