Weekly: Chinese steel market highlights

This week Chinese domestic steel market prices across all product categories on strong future market gains along with higher production cost. In addition to this, HRC and rebar export offers picked up on domestic gains. Spot iron ore price rally continues on strong Chinese appetite and tight supply. Coking coal prices also reported an increase on a weekly basis. China's Shagang Steel raised scrap purchase price by RMB 50 ($7) on tight supplies.

Chinese spot iron ore fines price hit over 6.5 years high

Chinese spot iron ore prices opened at $124.35/t, CFR China this week and rose to $130.8/t towards mid-week. However, towards week close, prices fell to $ 128.7/t. The prices continue to rally on strong Chinese appetite and overall tightness of the sintering fines. The continued investment in infrastructure projects in China has pushed up the prices.

Amid tight stock levels of mainstream mid-grade Australian fines at Chinese ports, Chinese mills are in the process of switching blends to reduce their reliance on mainstream Australian mid-grade fines.

As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports increased to 117.65 mn t this week as against 115.8 mn t assessed a week ago.

Spot pellet premium up w-o-w on improved buying interest

Spot pellet premium for Fe 65% grade pellets assessed at $ 7.25/t as against $6.5/t last week. Low alumina pellets witnessed support due to increased efficiency and cost-effectiveness. Chinese pellet buying interest improved this week amid a hike in fines price and recently announced sintering cuts in Tangshan. Several market participants expected high-grade pellet demand to be supported on the widening spread between medium- and high-grade fines.

As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports dropped to 10.3 mn t as against 10.6 mn t assessed a week ago.

Spot lump premium gains on the week

Spot lump premium witnessed this week at $ 0.0500/dmtu as compared to $ 0.0380/dmtu assessed last week. Lump premium rose on the back of better cost efficiency relative to sintering fines and speculative interest due to sintering controls in Tangshan. But port prices for lump are still not better than fines.

Coking coal offers increase w-o-w

Seaborne coking coal (HCC) prices increase on a weekly basis in recent deals concluded on FoB basis. However, on the other hand, the Chinese trading activity remained muted due to limited import quotas, coupled with customs-related concerns among buyers. Concerns also emerged regarding the escalating trade tensions between China and Australia, which might worsen the demand scenario for seaborne coking coal.

Other major Asia-Pacific markets outside China continued observing limited spot demand from end-users, despite a considerable recovery in steel production.

The latest offers for the Premium HCC grade are assessed at around $111.00/t FoB Australia, as against $108.25/t FoB in the previous week.

Domestic billet prices up by RMB 90/t

This week, Chinese domestic billet prices settled with an increase of RMB 90, against last week's closing. The prices of commonly traded Q235 billet 150mm diameter were reported at RMB 3,490/t ($510/t) in Tangshan, inclusive of 13 % VAT. The bids for imported billet in China also saw a rise and were ranging from $435-440/t, CFR, for non-ASEAN billets.

HRC export offer continues to increase on strengthening the domestic market

The country's steel manufacturers have further raised HRC export offers by $5-10/t this week backed by domestic market gains and hike in the raw materials costs.

The current week HRC export offer was assessed at $520-525/t FoB China as against $510-520/t FoB basis a week ago. However, importers continue to bid lower in anticipation of cheaper prices for cargo.

In similar lines, domestic HRC trade prices moved up by RMB 20-30/t and stood at RMB 4,020-4,040/t (Eastern China) compared with RMB 3,990-4,020/t (Eastern China).

Rebar export offers witnessed continual rise

The mills raised their rebar export offer for the second consecutive week with an increase of $5/t on a weekly basis.

Currently, the offer stands at $485-490/t FoB China in comparison with a $480-485/t FoB basis a week back.

The domestic rebar prices went up by RMB 30/t to RMB 3,670-3,700/t (Eastern China) as against RMB 3,640-3,670/t (Eastern China).