Weekly: China steel market highlights

The Chinese steel market exhibited mixed sentiments with concerns over export rebate cut, adverse weather conditions and production restrictions in the Tangshan province. Iron ore prices registered a fall however prices gained an upward momentum for semi-finished and finished steel products.

Product-wise market sentiments are mentioned below:

1. China spot iron ore prices down during the week- Chinese spot iron ore prices opened at $163.65 increased to $166/t, CNF China mid-week and subsequently dropped to $160.2/t. The escalating sintering and production curbs in Tangshan raised price volatility, keeping buyers on the side-lines. China's iron ore market was bracing for pollution curbs on steelmakers in Tangshan to become the new normal after local authorities announced plans to impose production controls on twenty-three steelmakers from Mar 20 to Dec 31 in a bid to lower emissions by 30%-50%.

As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports was recorded at 133.85 mn t as against at 130.9 mn t assessed a week ago.

• Spot pellet premium up w-o-w- Spot pellet premium for Fe 65% grade pellets was assessed at $53.6/t up by $1.45/t. Seaborne iron ore pellet premiums inched up on continued demand. Steelmakers are likely to increase their utilization of pellets given their attractive value-in-use in comparison to sinter feed. Spot buying interest was heard to have extended to certain low alumina Indian pellet cargoes, which are viewed as a low-cost direct reduction pellet alternative. As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports was recorded at 5.8 mn t against 5.6 mn t assessed a week ago.
  
  
• Spot Lump premium remains stable w-o-w-Spot Lump premium witnessed was at $0.5105 stable w-o-w. Limited transactions were witnessed at Chinese ports. There was an expected shift towards higher sinter usage for Chinese mills located in regions other than Tangshan due to lower cost-efficiency of lump.
  
  

2. Coking Coal prices slide down further- Australian coking coal prices inched down further this week, with most market participants adopting a wait-and- watch mode amid the recent price volatility seen in the Australia market for premium coking coal. The spot market saw relatively fewer bids and offers in the ex-China market for Australian premium low-volatile (PLV) hard coking coal (HCC), but buyers stayed out of the market.

Restocking demand for May-loading cargoes may emerge soon, but April delivery cargoes are still seeing weak buying interest.

The latest offers for the Premium HCC grade are assessed at around $112.50/t FoB Australia, in comparison with last week's $115.5/t FoB basis.

3. Domestic billet prices continue to rise on production cut-This week, Chinese domestic billet prices settled with a rise of RMB 50 ($8). The billet transactions were moderate while finished steel prices remained stable. The prices of commonly traded Q235 billet 150mm diameter were reported at RMB 4,480/t ($688/t) in Tangshan, including 13 % VAT.

4. Nation's HRC export offers continue to rise- Chinese mills continued to raise HRC export offers by $20-25/t in anticipation of the final announcement on export rebate cuts likely to be announced shortly.

The current week assessed offers stood around $740-750/t FoB China as against $720-725/t FoB basis in the preceding week. Meanwhile tier-I mills are offering in the range of $760-765/t FoB basis. Meanwhile the rising marine-freight rates and fresh announcement on the production curbs by Tangshan Government resulted in a surge in nation's HRC export offers this week

In the domestic market, prices were elevated by RMB 70-100/t to RMB 4,990-5,050/t (Eastern China) contrasted against RMB 4,920-4,950/t (Eastern China) a week ago.

5. Domestic rebar price remains stable w-o-w on stringent inspection- The domestic rebar prices for the week continued to hover at RMB 4,560-4,600/ t (Northern China). A stringent inspection being carried out by the Tangshan provincial Government to ensure reduced pollution levels weighed on the trade market sentiments. Furthermore, adverse weather conditions in the Eastern region along with a severe sandstorm in the Northern region of the country has significantly affected construction sites and transportation activities.