Weekly: Chinese steel market highlights

The nation's steel market witnessed limited activities this week with the Dragon Boat Festival holidays from 25 Jun until 28 Jun'20. Also, the decline in future market gains kept the domestic prices volatile.

HRC and Rebar's export offers remained stable on the week. Spot iron ore prices witnessed an uptrend on robust demand and Brazilian supply concern. Coking coal prices also remain stable although demand remains slow on production curbs.

China spot iron ore priced up during the week-

Chinese spot iron ore prices opened at $101.5/t this week, increased to $104.35/t towards mid-week and remained almost stable for the remaining half of the week. The prices picked up during the week ahead of Chinese Dragon boat festival holidays which began on 25th June. The prices continue to remain above $100/t due to strong steel demand and uncertainty around supplies from Brazil.

As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports increased to 109.25 mn t as against $108.35 mn t assessed a week ago.

Spot pellet premium down on weakening steel margins-

Fe 64% grade pellets assessed at $ 5.80/t down by $ 3.45/t w-o-w. The pellet premium dropped amid falling demand due to weak steel margins and rising inventories at major Chinese ports. Also, a shift to pellets in the blast furnace would incur an additional operational cost at the present prices.

As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports increased to 7.5 mn t as against 7.2 mn t assessed a week ago.

Spot lump premium rises on the week-

This week it stood at $ 0.1125/dmtu as against $0.108/dmtu last week. The rainy season in southern China raised complications in lump screening, with high moisture content and hence, the demand continues to be on the lower side.

As per data compiled by SteelHome consultancy, lump inventory at major Chinese ports increased to 21.2mn t as compared to 20.5 mn t assessed a week ago.

Coking coal prices stable w-o-w-

Australian premium low-volatile (PLV) hard coking coal (HCC) prices have held mostly steady this week in the absence of Chinese buyers due to a public holiday.

Also, the demand from ex-China markets in the Asia Pacific region continues to remain subdued because of massive steel production cuts.

In India, crude steel production has gradually resumed over the past month in line with the opening up of lockdown restrictions. However, inquiries for seaborne coking coal from India is unlikely to revive before September this year owing to the monsoon seasonal slowdown.

Latest offers for the Premium HCC grade are assessed at around $116.00/t FoB Australia, which was USD 112.25/t Fob basis towards the end of the previous week.

Domestic billet prices marginally up w-o-w-

At the beginning of the week, the domestic billet prices in China were at RMB 3,320/t ex Tangshan (including VAT), up by RMB 10/t compared with the end of the previous week.

HRC export offers remain largely stable-

The mills kept their export offers at almost similar levels due to limited trades' activity amid the Dragon boat festival. Also, Chinese mills are more focused on the domestic market amid better margins.

The current week HRC export offer stands at $440-445/t FoB China, which was $440-450/t FoB basis a week ago.

Meanwhile, domestic prices fell marginally by RMB 20-30/t to RMB 3,720-3,750/t (Eastern China) as compared to RMB 3,750-3,770/t (Eastern China) in the previous week.

Rebar export offers remain unchanged-

Currently, Rebar export offers remain unchanged against the previous week level and hover at $455-465/t FoB China. Meanwhile, the availability of cheaper alternatives has kept the interest of importers limited towards Chinese rebar.

On the other hand, the domestic rebar prices softened by RMB 20/t to RMB 3,560-3,590/t (Eastern China), which was RMB 3,580-3,610/t (Eastern China) in the preceding week. Higher production of rebar and the bad weather conditions impacting the demand weighed on the prices this week.

Source: SteelMint Research