Weekly: Chinese steel market highlights

This week the nation's steel market observed a steep hike in domestic prices on robust futures. Domestic prices gained upward momentum and led to an increase in export offers.

Following gains in the domestic market, HRC export offers went up. Rebar export offers remained firm. Iron ore prices continued to rise on restocking for winters. Coking coal prices reported an increase in a recently concluded deal.

Chinese spot iron ore price increased for the week- Chinese spot iron ore fines (Fe 62%) price opened at $126.8/t this week and increased to $130.95/t towards the weekend. The prices increased on the expectation of firm steel production and iron ore restocking demand in the winter.

As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports decreased to 130.3 mn t this week as against 131.6 mn t assessed a week ago.

Spot pellet premium up w-o-w- Spot pellet premium for Fe 65% grade pellets assessed at $28.55/t up against last week prices at $ 26.15/t. Amidst a tightening impurity tolerance due to high coke prices and wider steel margins, firm interests for higher grade pellets are being observed in China.

As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports dropped to 8.15 mn t this week as against 8.5 mn t assessed a week ago.

Spot lump premium remains stable w-o-w- Spot Lump premium witnessed at $ 0.0700 almost stable w-o-w. With the rise in Coke prices, Chinese demand for lump continues to suppress. However, falling pellet inventories at the port may support lump demand.

Domestic billet price down by RMB 30 ($4.5) w-o-w- This week, the billet prices in the Tangshan market (northeast China) settled with a drop of RMB 30 ($4.5), against last week. The prices of commonly traded Q235 billet 150mm diameter were reported at RMB 3,590/t ($546/t) in Tangshan, inclusive of 13 % VAT.

The billet transactions were moderate, while finished steel prices posed an upward trend. On the other hand, the billet import offers in the country have reached $500/t, CFR levels, however, we haven't encountered any deals at the increased price levels.

Coking coal prices trend up in recent deals- Seaborne coking coal prices have been showing an upward movement following several recent transactions concluded at higher levels on FoB basis in ex-China markets.

• A trade was concluded yesterday at $101.50/t FoB Australia for 75,000t of an Australian premium low-volatile cargo with an early January laycan.
  
  
• Another deal of 75,000 t cargo of an Australian premium mid-volatile coking coal was traded on Wednesday 25th Nov at $100/t FoB Australia with a late December laycan.
  
  

However, despite the recent strength observed in ex-China markets, the buying interest for seaborne coking coal is presently limited across major markets in the Asia-Pacific region including India despite ample material availability at steeply discounted levels.

Indian buyers are mostly refraining from immediate procurement in hopes that offers could decline further.

The latest offers for the Premium HCC grade are assessed at around $101.25/t FoB Australia which was around $97.25/t Fob basis.

HRC export offers surge amid a significant hike in domestic prices- The mills increased their HRC export offers by $25-30/t w-o-w and are offering at $570-575/t FoB China. Last week's offer stood at $545-550/t FoB basis. Increased demand from importers along with robust domestic demand and higher realizations continued to push mills to increase their offers.

Domestic market prices also increased by RMB 60/t w-o-w and stood at RMB 4,200-4,220/t (Eastern China) against RMB 4,140-4,160/t (Eastern China). The prices mentioned are inclusive of VAT.

Domestic traders rushed to restock anticipating a further hike in prices as the futures market rally continues.

Rebar export offers remain firm- The mills continued to offer Rebar for exports at $535-540/t FoB China unchanged against the previous week.

Domestic market prices dipped by RMB 100/t w-o-w to RMB 4,090-4,120/t (Eastern China) against RMB 4190- 4220/t (Eastern China) Prices mentioned are inclusive of VAT.

Domestic rebar trades turned bearish amid rainfall and adverse weather conditions.