Weekly: Chinese steel market highlights

Chinese steel market remained volatile with the reported increase in infection cases in Beijing along with rains hitting the northern and southern regions weakening the demand from the construction sector.

HRC export offers moved up amid gains in the domestic market. Rebar export offers, on the other hand, fell on the availability of cheaper alternatives. Strong domestic demand leads to an upside in iron ore prices. Fresh import bookings pushed coking coal prices higher during the week.

China spot iron ore prices inch down during the week-

Nation's spot iron ore prices remained almost stable for the week at $103.45/t towards beginning and assessed at $103 towards the weekend. However, the prices continue to remain above $100/t due to strong steel demand, and uncertainty around supplies from Brazil, which has suffered strong outbreaks of coronavirus.

The nation's crude iron ore production stood at 74.64 mn t in May'20, almost flat against 74.38 mn t in Apr'20, according to the National Bureau of Statistics.

Spot pellet premium down w-o-w- Fe 65% grade pellets assessed $13.60/t as against at $16.60/t last week. The pellet premium dropped due to following reasons:

--Rising iron ore preference

--Higher pellet inventories at major Chinese ports

--A shift to pellets in the blast furnace would incur an additional operational cost at the present prices.

Spot lump premium fell w-o-w- Spot Lump premium witnessed at $0.108/dmtu this week as against $ 0.1310/dmtu last week, fall on a weekly basis. Lump premium witnessed a decline in lack of stringent environmental regulations, falling pellet premium, and rising port inventories.

Iron ore port inventories increase- As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports increased to 108.5 mn t as against $107.75 mn t assessed a week ago. Pellet inventory at major Chinese ports increased to 7.2 mn t as against 6.9 mn t assessed a week ago. Lump inventory at major Chinese ports increased to 20.5 mn t as against 20.1 mn t assessed a week ago.

Coking coal price increases on fresh import bookings-

Seaborne coking coal prices increased this week on recent deals concluded at higher levels.

However, an increase in dry bulk freight rates for Panamax and Capesize vessels in the Australia-China route and a short trading week expected in China next week due to a festive celebration on June 25-26 led to the increase in prices.

Indian spot demand for seaborne coking coal continues to remain subdued, as downstream demand for steel has been slow despite the gradual resumption of infrastructure activities after the unlock 1.0 announced by the Indian government.

However, rebound in demand is anticipated after the monsoon season ends in late September, according to market sources.

The latest offers for the Premium HCC grade are assessed at around USD 112.25/t FoB Australia, which was a $109/t FoB basis in the previous week.

Domestic billet prices fell marginally-

The domestic billet prices in China are at RMB 3,310/t ex Tangshan (including VAT), down RMB 10/t, against the last week.

HRC export offer rises further on higher domestic prices-

The strong domestic market sentiments pushed mills to further increase their HRC offer by $5-10/t this week.

The current week HRC export offer stood at $440-450/t FoB China as compared with a $435-445/t FoB basis in the previous week.

In similar lines, the prices in the domestic market increased by RMB 100-110/t to RMB 3,750-3,770/t (Eastern China) in contrast with RMB 3,650-3,660/t (Eastern China).

Rebar the export offers fall marginally-

Rebar export offers fell marginally by $5/t weighed by the higher difference in mill offers and customer bids. Also, importers had limited interest in Chinese rebar as other exporting nations were offering at a cheaper price.

Currently, the rebar export offer stands at $455-465/t FoB China, which was a $460-470/t FoB basis a week ago.

On the other hand, domestic rebar prices continued to hover at RMB 3,580-3,610/t (Eastern China), unchanged over the previous week.

Source: SteelMint Research