Global steel, raw material prices dip in Jun'24, Chinese HRC offers at record lows

• Iron ore drops sharply amid weak China appetite
  
  
• Coking coal bucks trend on scarce June loadings
  
  
• Indian export offers on hold over May-June
  
  

Morning Brief: Most global steel and raw material prices down-trended m-o-m in June 2024, after showing an upward flicker in May, reveals data maintained with BigMint. Iron ore declined the most while coking coal bucked the trend.

In June, Chinese hot rolled coil (HRC) offers, after rising in the previous month, fell back again, by 3.5% or $19/tonne (t) m-o-m to $523/t FoB China (from $542/t in May 2024), their lowest since January 2021, the time from which data is available with BigMint. Japanese offers also fell $8/t or 1.41% to $560/t ($568/t) while Indian mills held back from the market for two consecutive months (May and June) amid better home realisations and unviability in export offers.

In longs, Turkiye's rebar fell a slight 1.2% or $7/t to $578/t ($585/t). Black Sea billet export offers also dipped, by $6/t to $496/t ($502/t).

All prices are on FOB basis.

In raw materials, Fe62% iron ore fines, CFR China, dropped a steep 9% or $11/t m-o-m to $107/t ($118/t). But the premium HCC coking coal from Australia, CFR India, headed north by over 4% or $12/t to $270/t ($258/t). Coking coal had breached the psychological $300/t barrier in September last year. But has fallen below this threshold since April.

HMS 80:20 scrap, CFR Turkiye, upped a slight almost 1% to $384/t ($381/t) in the month under review.

Factors that impacted prices in Jun'24

Chinese HRC offers fall to three-and-a-half year lows: Chinese hot rolled coil offers fell in June amid a variety of reasons. One was the decline in SHFE steel futures. M-o-m, data reveals, futures fell 1.5% in June, amid weak domestic and global demand. The Middle East was slow because of the Eid celebrations. But the expected post-Eid rebound was missing as buyers waited for further price falls. In Vietnam, domestic mills like Formosa Ha Tinh reduced HRC prices by a steep $30/t in mid-June for August shipments, dealing a blow to Chinese mills. Vietnamese end-buyers too were in wait-and-watch mode. Chinese offers to Vietnam fell $17/t CNF m-o-m in June and to the Middle East by $14/t CNF.

Indian mills focus on higher domestic realisations: Indian mills kept their export offers on hold for two months in a row as they found it tough to compete with the cut-throat Chinese pricing. Weighed down by inventory since early this year, especially in flats, mills strategically cut production or opted for maintenance and effected interim price hikes over the last few months. The production cuts led to lesser supply and supported the hikes, which helped to increase domestic realisations. For instance, ex-Mumbai trade-level HRC prices in June were at INR 53,800/t ($644/t), whereas Chinese offers to Vietnam touched $601/t CNF HCMC and, to the Middle East, $625/t CNF Abu Dhabi.

Turkish rebar falls on global cues: The global longs market has been seeing supply outstripping demand for quite some time now. Turkiye failed to supply at its desired price levels in June, leading to a dip in rebar rates. Businesses are stagnating and investments are low in the European Union, one of Turkiye's key markets, for over a year now, which, in turn, is impacting its rebar exports. Extension of the safeguard measures for another two years will further restrict imports into the EU. Moreover, Chinese exports are also spoiling Turkish opportunities. Further, the fall in Chinese steel futures also had repercussions on rebar globally. Tangshan billet prices retreated in early June amid mounting finished inventories.

Weak rebar fails to support Black Sea billets: The Black Sea billet is feeling the blues in June amid high inventories in the face of sluggish demand for finished steel globally. As per some sources, demand from some North African countries is slack, making Russian suppliers turn towards Turkiye, where bids were rather low and procurements were done on need basis. Moreover, the drop in benchmark rebar prices also dragged down billets.

Chinese iron ore demand tepid amid output cuts: China's imported iron ore prices have fallen to over two-month lows in June. The drop was driven by crude steel production cuts amid lukewarm steel demand, squeezed margins and carbonisation drives. A decline of 1.4% was seen in crude steel production over January-May, 2024 while June data is awaited.

Steel mills are primarily purchasing iron ore on need-basis and mills are not keen to stock up. Thus, iron ore inventories at China's major ports increased to 146.95 million tonnes (mnt) on 20 June compared to the previous week. Inventories were assessed at 144.65 mnt on 23 May.

Turkish imported scrap up on rise in US, EU offers: Turkish imported ferrous scrap rose a mere 1% m-o-m due to higher offers from the US and European suppliers amidst rising collection costs although the collection volumes were low. Turkish mills had to restock for July so a few deals were concluded at higher levels, supporting the overall increase in prices. European suppliers had limited material to offer owing to low collection volumes.

Coking coal rises on supply constraint fears: Australian PHCC prices picked up on high demand for July loading cargoes as buyers in India apprehended supply constraints, going forward. The availability of forward loading cargoes remained subdued giving a leg-up to prices. "A supply constraint is expected since forward cargoes became expensive amid scarce June loadings," said a source.

Outlook

Global market fundamentals may not change too soon, a factor that could keep steel and raw materials prices moving in a narrow range next month. Overall, the outlook on global steel demand remains cloudy in the medium to long term, which can cast a shadow on raw material prices, going forward.