Global steel, raw material prices slip marginally in Dec. Black Sea billets plunge to 16-month low

• Iron ore bucks trend, get Chinese buying support
  
  
• Weak rebar pressures down Turkiey scrap offers
  
  
• HRC offers end a challenging year on low note
  
  

Morning Brief: Extending the trend seen in November, global steel and raw material prices have shown a m-o-m negative trend in December 2024 so far. Except for iron ore, which showed a slight uptick.

The winter chill has further turned steel demand cold in the western geographies as well as in China. BigMint goes behind the scene:

Price overview

Chinese hot rolled coil (HRC) offers were more or less stable, losing a negligible 0.40% or $2/tonne (t) m-o-m to rest at $492/t FOB against $494/t in November. Japanese offers dipped almost 1% to settle at $505/t ($510/t) m-o-m while Indian mills had no offers to speak of in this month even after re-entering the market from late September.

In longs, Turkiye's rebar dropped 2.55% to a six-month low of $573/t ($588/t) while Black Sea billets plunged over 21% to a 16-month low of $445/t ($466/t).

All prices are on FOB basis.

In raw materials, the Fe62% iron ore fines, CFR China, rose 3% to $105/t ($102/t). The premium HCC coking coal from Australia, CFR India, dipped nearly 1% to $217/t ($219/t).

HMS 80:20 scrap, CFR Turkiye, dipped over 3% to $342/t ($354/t), which is a two-year low, since similar levels were last seen in November 2022.

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

HRC offers feel heat of dampened demand: Hot rolled coil (HRC) prices continued to slide m-o-m after a spurt in October as the excitement over the Chinese policy stimulus began to wear off. The sustained slump in global steel demand is culminating in a year-end slackness with the onset of winter, which, in any case, is a lean period for construction. Growth in Chinese manufacturing and infra investments in November were nothing to write home about. With these sentiments in mind, coupled with a steep decline in home demand, Baosteel, the world's largest steel manufacturer, rolled over its HRC prices for January sales.

Japan is feeling the heat of excessive steel dumping from China in importing geographies, which is snuffing out its export opportunities.

India too is being unable to compete with the rock-bottom Chinese offers. Secondly, the anti-dumping probes against Indian HRC exports by the European Commission (EC), Vietnam, Malaysia, and Turkiye are increasingly snuffing out export opportunities for Indian mills.

Sustained Chinese buying supports iron ore: Prices of the Fe62% fines imported from Australia, however, rose on continued buying from China, although the pace of off-take slowed over 11MCY'24 against 10MCY'24. However, higher port inventories allowed mills to look ahead and continue restocking to bridge the supply gap that will be encountered during the Lunar holidays in early 2025. Some mills which had low stock levels, did some buying, which kept prices supported.

Turkish rebar declines in domestic, export markets: Demand for rebar in Turkiye's export and domestic markets both remained dull over November-December. In fact, the major trigger for declining imported scrap prices in Turkiye was the drop in rebar export demand followed by a dull domestic rebar market, which kept the mills scraping the bottom of the barrel while purchasing local scrap.

Prices of rebar, FOB Iskenderun, hovered at $570-585/t levels in the last two months, down by $70-90/t when compared with November 2022 levels of $640-670/t.

Black Sea billets see red over Chinese surge: Black Sea billets continued to feel the blues in December as a result of two key factors. One was the rush of cheaper imports of Chinese billets, which are giving the Russian mills a run for their money. Chinese billets were at $433/t exw-Tangshan in October, slid further to $426-427/t in November-December.

Secondly, a surge in cheap Chinese billets into Turkiye is a huge blow to the Russian mills because the latter has traditionally been a heavy buyer of Black Sea billets. A surge in cheap billets imports depressed domestic and imported scrap offers. Black Sea billet FOB prices hovered at $450-460/t levels over November-December, down by $40/t when compared with November 2022 levels ($485-495/t).

Prices of billets, CFR Iskenderun, hovered at $470-485/t levels in the last two months of the calendar, down by $50-60/t when compared with November 2022 levels ($530-550/t).

Turkiye scrap offers weaken amid dull rebar demand: Imported scrap offers into Turkiye have been falling due to a few reasons.

1) Decreased demand for rebars in Turkiye's domestic and export markets amid declining construction steel demand.

2) The surge in cheap billet imports into Turkiye, which is elbowing out usage of scrap as raw material amid price viability in the former.

3) Fluctuating lira kept jittery buyers on the sidelines.

4) Weak domestic demand for finished steel.

Coking coal range-bound amid lukewarm coke demand: Imported coking coal prices slipped marginally but a few factors are governing the dynamics.

1) There was moderate requirement from India in anticipation of some steel demand rebound from the new calendar.

2) Supply was fairly limited in the market but some floating cargoes helped to meet user demand.

3) With the ongoing production cuts in China, met coke prices there witnessed the fourth round of price cuts recently which have dampened imported met coke prices in India too, which had a spin-off effect in coking coal too.

Outlook

Steel and its raw material prices may remain range-bound in the short term although there can be some restocking demand ahead of the upcoming Lunar holidays in China. Imported scrap offers into Turkiye may stage a comeback amid rising collection costs, tighter supplies and a rebar restocking demand post-Christmas and New Year holidays.

HRC prices may remain in a bear grip amid the Chinese dumping glut.

Billets may continue to be pressured by the Chinese onslaught.