Global steel, raw material prices slide m-o-m in Sep'24; Coking coal plunges

• Turkish rebars buck trend on European demand
  
  
• Chinese dumping impacts billets, rebar markets
  
  
• China stimulus steps may positively impact prices
  
  

Morning Brief: Global steel and raw material prices showed a m-o-m decline in September 2024, except for Turkish rebars which have been slightly volatile over the last few months. Most prices have shown a m-o-m decrease since May while scrap has been fluctuating somewhat from March. Coking coal lost ground the most, by 10%, in September. BigMint goes behind the scene:

Price overview

Where flats are concerned, in September, Chinese hot rolled coil (HRC) offers lost another 3% or $15/tonne (t) m-o-m to settle at $459/t FoB China ($474/t in August), their lowest so far since January 2021-the time from which data is available with BigMint. Japanese offers decreased 7% to $490/t ($525/t) m-o-m while Indian mills have been holding back from the market since May.

In longs, Turkiye's rebar inched up 2% to $586/t ($576/t) while Black Sea billets fell another 3% m-o-m to $464/t ($478/t).

All prices are on FOB basis.

In raw materials, the Fe62% iron ore fines, CFR China, dipped a moderate 6% to $93/t ($99/t). The premium HCC coking coal from Australia, CFR India, however, headed south by a sharp 10% or $22/t to $201/t ($223/t).

HMS 80:20 scrap, CFR Turkiye, dipped 1% to $368/t ($373/t) in the month under review.

Factors that impacted global steel, raw material prices in Sep'24

China continues to lower price, play in volumes: Chinese steel prices continued to roll down amid pressures from various quarters. One was the slew of anti-dumping investigations being launched across several geographies China has been exporting to. Secondly, demand has been very dull, as proved by the down-trending macro indicators. Lastly, China has again resumed its decarbonisation drive with renewed vigour keeping in mind its dual policy of carbon peaking by 2030 and net zero by 2060.

Against such a backdrop, mills were under greater strain to export. The Chinese mills have been playing in volumes at the cost of predatory pricing. Plus, the yuan had been steadily eroding against the dollar till July but started recouping a little from August onwards. This factor also encouraged exports.

Indian mills hold offers for 5th month: Indian mills continued to withhold offers, a trend started in May, mainly propelled by a few factors. One was, of course, the aggressive Chinese offers that out-priced Indian mills from two lucrative destinations-Vietnam and the Middle East. For instance, Chinese HRC offers to Vietnam fell 22% to a rock-bottom $476/t CNF HCMC in September from $609/t in January. Similarly, Chinese offers to the Middle East fell 20% in September since January.

Secondly, an imports surge in HRCs and plates has been depressing domestic demand, and driving Indian mills to maintenance schedules. This, in turn, decreased their export allocations and helped to keep domestic prices above Chinese export offer levels. Lastly, the EU, Vietnam, Malaysia have initiated anti-dumping investigations into HRC exports from India while Turkiye has already slapped provisional duties. This growing protectionist stance is a limiting factor for Indian exports.

Turkish rebar rides east European demand: Surprisingly, Turkish rebars staged a slight comeback. These fell steadily to sub-$600/t FOB-levels from March, recouped marginally in July to fall back again in August and recover in September. Turkish rebars have been handicapped by geopolitics, especially since sales of 54 products have been restricted, including rebars, to Israel. This dikat will remain in force till Israel declares a ceasefire in Gaza.

Moreover, the main importing regions, the Balkans, as well as some portions of Asia, have shown subdued demand because of aggressive Chinese competition.

September's rally can be attributed to improved eastern European demand amid the strengthening of the euro against the dollar.

Black Sea billets feel China heat: Prices of billets emerging from the Black Sea region have been falling steadily since February this year amid lacklustre demand in the finished longs market and intense competition from China. It may be noted that China has been shipping semis and other finished products to all corners of the world, dictating prices in the process. Demand from Turkiye, the main market, has been particularly weak since it has been buying billets from China as a replacement for scrap.

Iron ore loses lustre amid Chinese production cuts: Prices of the Fe62% fines, China CFR, remained under pressure amid weak Chinese market fundamentals which fuelled limited buying activity. Demand has been reducing due to maintenance shutdown by mills leading to further production cuts in August. Chinese iron ore imports growth rate actually reduced in January-August to 5% from nearly 7% in January-July.

Delayed Chinese billets deliveries revive scrap demand: In the first half of September, Turkish ferrous scrap prices fell as mills delayed purchases amid weak steel demand and competition from cheaper Chinese billets. However, from mid-September, Turkiye's imported scrap prices became somewhat stable, with a slight price increase as Turkish mills were by now facing a scrap shortage, and booked significant volumes for late September and early October deliveries. The scrap shortage was exacerbated by the fact that some Chinese billet consignments were delayed.

Coking coal slides amid supply-demand mismatch: Prices of coking coal shipped from Australia to India plunged to $201/t CFR India. The reason was mainly higher supply amid muted demand in India. Indian buyers procure through quarterly contracts. Hence, the material used in September was bought around 45 days ago. With steel demand low during the monsoon months of June-September, procurement was sluggish.

Moreover, globally coking coal has been languishing amid Chinese production cuts and several rounds of reductions in met coke prices as well.

Outlook

Overall, much will depend on which way the wind blows in China, which is seeing a slight increase in demand and prices. The recent stimulus measures will support this upturn. This can impact prices upward globally. However, Chinese iron ore restocking ahead of the National Day holidays has been completed which may indicate a spell of slack buying ahead. This scenario can further pressure down ore prices.

Coking coal prices are expected to stabilise and rise to $220-240/t levels in the October-December quarter or early 2025 although Indian may remain subdued as mills may have stocked up, as per some sources.