Weekly: Chinese steel market highlights

• Iron & steel futures surge post-Chinese holidays
  
  
• Baosteel cuts HRC offers by $15
  
  
• Shagang raised scrap purchase price by RMB 80 ($12)
  
  

Chinese steel market resumed activities yesterday after remaining inactive during Golden week holidays. Domestic HRC, rebar, and billet prices gained momentum amid a surge in futures. According to SHFE futures, HRC Jan'21 contract increased to RMB 3,772/t on 9th Oct, up by RMB 80 on 30 Sept'20.

On the other hand, HRC and rebar export offers remain unchanged since the trade remains suspended for one week. Iron ore prices picked up on hike in futures. However, there was a dip in coking coal prices amid increased port restrictions on imported coal from Australia.

Meanwhile, yesterday Baosteel announced a cut in HRC prices by RMB 100/t ($15) and kept CRC and heavy prices unchanged. However, raised HDG and Color coated prices by RMB 100/t ($15) and RMB 150/t ($22) respectively for Nov deliveries.

China's largest EAF steelmaker- Shagang group hikes its scrap purchase price by RMB 80/t ($12) for all grades. Prices have increased amid decline in stocks and sharp increase in billet prices post Chinese holidays.

Chinese spot iron ore price increased post holidays- Chinese spot iron ore prices opened at $123.15/ t this week and remained stable for most of the week due to limited trading activity amid the ongoing Chinese Golden Week holidays. However, post-holidays, towards the weekend prices picked up to $125.85/t on firm buying interest.

The surge in iron ore prices is also attributed to port-side reselling opportunities. Also, a slight uptick in steel finished product prices has shifted the interest of mills back to medium grade fines amid recovering margins and improved cost-benefit as compared to low-grade fines.

Brazilian iron ore producer Samarco plans to resume pellet production starting in December, initially close to an 8 mn t per year rate, as it works to implement new iron ore processing measures.

As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports increased to 123.6 mn t this week as against 122.65 mn t assessed a week ago.

Spot pellet premium almost stable w-o-w- Spot pellet premium for Fe 64% grade pellets assessed at $17 /t slightly up against last week's prices at $ 16.85/t.

Amid limited demand from China-based market participants due to the Golden Week holidays, market sources expected stronger demand in the near term following sintering restrictions. End-users are expected to increase their direct feed utilization that may lead to increased pellet utilization.

Spot lump premium weighed down by oversupply- Spot lump premium was witnessed at $0.0800/dmtu as compared to $0.0820/dmtu assessed last week. The continued oversupply at the port side inhibited the price growth despite the sintering controls in Tangshan and Handan.

Coking coal prices slide downwards - Seaborne coking coal prices have slightly decreased during this week due to thin liquidity as the Chinese markets remained closed for the Golden Week holidays.

There is a growing concern about the tightening of Chinese port restrictions, along with this, Chinese state-owned power utilities and steel mills have already been verbally notified to stop importing Australian coal, according to multiple sources. This could impact seaborne coking coal demand and prices in the near term.

Indian end-users' spot demand for imported coking coal has lately remained moderate since they are waiting for the Chinese market to resume. Meanwhile, India's domestic steel production continues at optimum levels with large-scale integrated steelmakers having ramped up capacity utilization at all major blast furnaces.

The latest offers for the Premium HCC grade are assessed at around $132.25/t FoB Australia, which was $139/t FoB basis before the holidays.

Domestic billet prices increase steeply with the reopening of the market-The billet prices in the Tangshan market (northeast China) on 09 Oct'20, opened with a sharp rise of RMB 70 after the Golden week holidays. The prices of commonly traded Q235 billet 150mm diameter was reported at RMB 3,370/t ($495/t) in Tangshan, inclusive of 13 % VAT.

HRC export offers remain stable on the week-
The mills have kept the offers unchanged this week at $500-505/t FoB basis against the offers before the holiday period.

However, on the other hand, domestic HRC prices witnessed the w-o-w increase of RMB 70/t to RMB 3,880-4,000/t (Eastern China) as the downstream buyers rushed to restock after the week-long gap.Last week prices before the holidays stood at RMB 3,810-3,830/t (Eastern China).

Rebar export offers remain unchanged w-o-w-The mills have kept rebar export offers stable this week which continues to hover at $485-495/t FoB China. The importers have kept their bids low and continue to look out for cheaper cargoes in the global market.

However, the domestic rebar price gained upward momentum with an increase of RMB 40/t and stands at RMB 3,670-3,700/t (Eastern China) amid the restocking activities from the construction sector which resumed recently after the National day holiday. Last week prices before the holidays stood at RMB 3,630-3,660/t (Eastern China).