Chinese Steel Market Highlights- Week 52, 2019

This week, Chinese domestic steel market prices exhibited mixed responses with HRC prices rising amid tight supplies, while the rebar prices tumbled amid buyers awaiting clarity on the price trend.

Meanwhile, Chinese HRC export offers moved up owing to an uptrend in domestic prices. Spot iron ore prices were weighed down by increased port inventories. Meanwhile, coking coal prices remain largely stable.

Increasing port inventories weigh on Chinese spot iron ore prices- Chinese spot iron ore prices opened up this week at USD 91.10/MT CFR China and dropped to USD 90/MT, CFR China towards the weekend depicting a shift towards medium grade ore. Also, rising port inventories contributed to the price drop for the week.

As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports increased to 130.75 MnT as against 129.2 MnT assessed towards the end of last week.

The stocks at Chinese mills across all regions increased because most mills had replenishment demand in preparation for the upcoming seven-day holiday that will begin January 24.

Spot pellet premium up W-o-W- Spot pellet premium for Fe 65% grade pellets picked up to USD 25.45/MT, CFR China as against USD 23.95/MT, CFR China assessed last week.

The demand for imported pellets remained on the higher side amid winter production curbs. Since December 19, steel mills in East China's Shandong province and North China's Shanxi province have been forced to obey strict production curbs because of heavy air pollution.

Spot lump premium down W-o-W- Spot Lump premium down W-o-W and stood at USD 0.2400/dmtu as compared to USD 0.2495/ dmtu a week before. Few end users were heard replacing lumps by fines. Also, lump inventory at major ports recorded rise to 18.9 MnT this week against 18.3 MnT a week ago.

Coking coal offers stable amid low market activities- Seaborne coking coal offer remains unchanged this week amid low inquiries owing to the Christmas holidays. Meanwhile, market participants await Chinese Q1 long term prices for premium hard coking coal from Shanxi. However, the same is anticipated to remain stable in Q1 2020.

Also, buyers continue to focus on February-loading cargoes in the premium hard coking coal segment.

The latest offers for the Premium HCC grade assessed at around USD 136.00/MT FoB Australia, unchanged over the previous week offers.

Domestic billet prices witness continual fall W-o-W- The Chinese domestic billet market was settled at RMB 3,300/MT, down RMB 40/MT as compared to RMB 3,340/MT a week ago. The market sentiments in the country were reported weak.

China HRC export offers rise further amid increasing global prices- This week, the Chinese HRC export offers witnessed a further hike by USD 5/MT with the boosted global HRC market sentiments and increasing prices amid easing US-China trade spat.

Thus, the current HRC export offer stands at USD 485-490/MT FoB China as compared with USD 480-485/MT FoB basis a week ago.

Meanwhile, the domestic HRC prices rose by RMB 30/MT to 3,900-3,910/MT (Eastern China), which was RMB 3,870-3,880/MT in the preceding week.

Tight supplies in Eastern China amid transport-related hurdles and provincial governments tightening the production cut regulations drive the prices upward, while the demand kept supporting price.

China rebar export offers remain unchanged amid lower bids- China rebar export offers remained consistent with the previous week offers over dull buying. Also, competitive offers from other major exporting nations and lower bids by the overseas buyers kept the nation's Rebar offers largely stable.

Thus the rebar export offers continued to hover at USD 465-473/MT FoB China.

Meanwhile, domestic rebar prices witnessed a fall by RMB 70/MT to RMB 3,640-3,670/MT (Eastern China) as compared with RMB 3,810-3,840/MT in the preceding week.

Source: SteelMint Research