Weekly: Chinese steel market highlights

The nation's domestic steel prices gained momentum this week on strong futures and optimistic sentiments experienced in the domestic market.

Meanwhile, HRC export offers remained range-bound, while the Rebar export offers edged-up on better domestic margins. A boost in buying interest pushed both spot iron ore and coking coal prices upward during the week.

Chinese spot iron ore price increased on improved buying interest-
Chinese spot iron ore prices opened at $115/ t this week and increased to $117.95/t towards the weekend due to an increased interest in December-arrival cargoes. However, rising coke prices in China raised concerns among steelmakers for the overall raw material costs, and some sources said this would blunt the attractiveness of high silica materials.

As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports increased to 128.95 mn t this week as against 127.8 mn t assessed a week ago.

Spot pellet premium up on preference amid cost-efficiency-
Spot pellet premium for Fe 65% grade pellets assessed at $27.80 /t up against last week prices at $ 24.85/t. As per sources, the current pellet premiums remain supported despite thinning steel margins on account of the savings in coke usage. Pellet being the direct feed counterpart of lump has seen sustained demand with its usage seen as coke-efficient through a lowering of slag rate.

As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports dropped to 10.25 mn t this week as against 11.25 mn t assessed a week ago.

Spot lump premium decline w-o-w-
Spot Lump premium witnessed at $ 0.0700/dmtu as against $ 0.0780/dmtu last week. High coke prices in China continued to compress lump premiums.

Coking coal prices up on trades at higher prices-
Seaborne coking coal price rose marginally this week as buying interest turned positive following higher transacted prices for some December-laycan cargoes.

However, Chinese demand remained subdued amid new restriction on coal imports.
Meanwhile, steel mills in China turned to countries such as Canada to source premium hard coking coal, after Australian coal sales to China came under an informal ban.

Nevertheless, the seaborne coking coal market is expected to strengthen in the ongoing quarter amid continued recovery in steel demand from global industrial and construction activities.

Latest offers for the Premium HCC grade are assessed at around $109.00/t FoB Australia, which was $105/t FoB basis a week ago.

Chinese domestic billet price up by RMB 10 ($1.5) w-o-w-
This week, the billet prices in the Tangshan market (northeast China) settled with a rise of RMB 10, against last week. The prices of commonly traded Q235 billet 150mm diameter were reported at RMB 3,440/t ($514/t) in Tangshan, inclusive of 13 % VAT.

HRC export offer remained range-bound-
The mills continued to offer at $515-530/t FoB China as against $520-530/t FoB basis a week back, despite an increase in domestic prices. The competition in overseas markets increased from other exporting nations due to which mills kept the offers largely unchanged.

On the other hand, domestic HRC prices gained RMB 20-30/t over the week and stood at RMB 3,940-3,960/t (Eastern China). The future market gains and improved demand from the home appliance industry for CRC kept supporting the HRC prices.

Rebar export offers up on improved domestic demand-
The mills increased export offers by $5/t to $485-495/t FoB China, which was $485-490/t FoB basis a week back.

Increased procurement by construction industry amid good weather conditions and gains in the futures market boosted the domestic market prices and sentiments. However, overseas buyers are bidding at $470/t FoB basis, leading to no deals.

The domestic prices stood at RMB 3,750-3,780/t (Eastern China), increasing by RMB 40/t on the week against RMB 3,710-3,740/t (Eastern China).