Weekly: Chinese steel market highlights

China's steel market showed a mixed trend this week, with flat domestic rebar prices, fall in billet prices and gain in HRC domestic and export prices. Iron ore offers moved up on optimistic market sentiments while coking coal prices were range-bound on weak buying interest from major importers.

China spot iron ore prices increased on improved market sentiments- Chinese spot iron ore prices opened at $107.80/t this week and closed at $111.45/t on Friday.

Prices remained supported amid stable steel margins and improved weather conditions in southern China raising expectations of increased steel consumption in the near-term. Stocks for Australian mid-grade fines remained tight. Demand for high-grade Carajas fines also gained.

Iron ore inventory at major Chinese ports increased to 116.95 mn t compared with 115.05 mn t a week ago, according to data provided by SteelHome consultancy. Higher inventories may pressure prices if the rising trend continues.

Spot pellet premium up w-o-w- Spot pellet premium for Fe 65% grade pellet was assessed at $13.15/t premium to the 62pc index, up from a $ 12.5/t premium last week. Several market participants showed interest in European low-alumina pellet brands due to their cost-effectiveness.

Abundant lump supply may curb imported pellet use, as the combined proportion of lump and pellet is usually around 20-25% of the furnace burden in the summer season when emissions control measures are lax.

Rising port side pellet stocks may also pressure prices in the near-term. Pellet inventory at major Chinese ports increased to 10.2 mn t against 9.5 mn t a week ago, according to SteelHome.

Spot lump premium unchanged on lenient environmental regulations- The lump premium was stable at $ 0.0550/dmtu to the 62pc index with mills using more fines in the absence of sintering restrictions.

Coking coal prices remain range-bound- Seaborne coking coal prices were mostly unchanged this week, as stringent government policies resulted in weak buying interest among Chinese buyers despite lower offers.

Most spot buyers preferred to stay on the sidelines owing to the lack of import quotas. Adequate global stocks and slow demand pressured seaborne coking coal prices further.

Indian spot demand would gradually emerge in the fourth quarter on the back of restocking demand after the monsoon season ends in September.

The latest offers for the Premium HCC grade were assessed at around $110.50/t FoB Australia compared with $111.50/t FoB basis a week ago.

Domestic billet prices decline on volatile futures- Domestic billet prices fell by RMB 30/t this week. Prices of commonly-traded Q235 billet 150mm diameter was reported at RMB 3,390/t ($486/t) in Tangshan, inclusive of 13 % VAT. Imported billet prices were around $420/t CFR for non-ASEAN billets, unchanged from last week.

HRC export offers continue upswing- HRC export offers moved up by around $5-10/t following gains in the domestic market. Higher bids from overseas buyers supported prices.

Currently, export offers are at $480-490/t FoB China vs $475-480/t FoB basis a week ago.

Few parcels of HRC were heard to have been booked for export to Pakistan at $500/t CFR towards the end of the previous week.

Domestic market prices also strengthened by RMB 40-50/t to 3,970-4,000/t (Eastern China).

Rebar export offer remains unaltered- Rebar export offers remained largely stable this week as mills were not in a hurry to export with decent profit margins in the domestic market.

China's rebar export offers remain high as compared with other exporting nations at $465-475/t FoB China, unchanged from last week.

Domestic rebar prices were down by RMB 10/t to RMB 3,600-3,630/t (Eastern China).