Weekly: Chinese Steel Market Highlights

The week nation's steel market witnessed a significant fall in its steel prices on pessimistic sentiments due to lockdown announced in various countries to curb the spread of Covid-19. This also resulted in a decline in export offers as buyers turned cautious while placing orders amid fears of a slowdown in economies and lower consumption during the lockdown period.

-- The HRC export offers slumped amid competitive offers from other major exporting nations. Rebar export offers, on the other hand, fell amid the increased gap between bids and offers. Domestic billet prices witness a significant decline this week. Spot Iron ore prices went up due to mining disruptions and suspension of mining activities amid lockdown. Weak buying interest and dampened demand led to a fall in the coking coal prices this week.

Spot iron ore increased amid concerns of global shortage-

-- Chinese spot iron ore prices opened up this week at USD 80.20/MT, CFR China and increased to USD 85.9/MT, CFR China towards weekend amid worsening concerns due to Coronavirus outbreak. A nationwide 21 days lockdown in India and South Africa has lead concerns on global shortage.-- As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports recorded at 121.15 MnT as of 26th Mar as against 123.75 MnT assessed a week ago.

Spot pellet premium up marginally W-o-W-

-- Spot pellet premium for Fe 65% grade pellets assessed at USD 29.85/MT, CFR China this week as against USD 29/MT, CFR China last week. The end users are, however, not ready to pay a premium for improved efficiency and are heading to reduce production costs.

Spot lump premium weighed down by concentrate production-

-- Spot lump premium for the week witnessed at 0.2960/dmtu against USD 0.3100/dmtu towards last weekend. The lump premium witnessed increasing pressure following a resumption of domestic concentrate production.

-- Also, end-users preferred not to secure end-April and May arrival lump cargoes.

Coking Coal prices decline amid weak sentiments and hampered demand-

-- Seaborne coking coal prices have fallen drastically this week as the ongoing coronavirus pandemic has hampered demand in the China markets. Meanwhile, the majority of the Chinese buyers are expecting a further correction in seaborne metallurgical coal prices, across all categories.

-- Indian buying interest for seaborne coking coal could weaken further with announcing production cuts by major steel mills following the 21-day countrywide lockdown order from the government for three weeks starting last Tuesday, March 24.

-- Latest offers for the Premium HCC grade are assessed at around USD 152.00/MT FoB Australia as compared with 162.50/MT FoB basis a week ago.

Domestic billet price witnesses continual decline-

-- China continues importing billets from Russia and India. According to SteelMint's assessment, this week country was reported to book approximately 70,000 MT billets from both the countries; Russia and India.

-- Meanwhile, the domestic billet prices in China are at RMB 3110/MT ex Tangshan, including VAT, down RMB 40 against last week.

HRC export offer falls further as various countries impose a lockdown-

-- The nation's HRC export offers were weighed down by USD 20/MT on thin trades amid COVID-19 outburst. Various nations across the globe have locked down their boundaries as a precautionary measure to curb the spread of the virus. Most of the overseas buyers cancelled their orders once their countries-imposed lockdown to contain COVID-19.

--Also, a devaluation of INR against USD led to reduced offers from Indian manufacturers increasing the already fierce competition in the global market.

-- Currently, the export offer stands at USD 425-430/MT FoB China, which was USD 435-440/MT FoB basis at the beginning of the week.

-- The domestic HRC prices slashed by a whopping RMB 100-110/MT W-o-W basis to RMB 3,330-3,350/MT (Eastern China) as compared with RMB 3,440-3,450/MT (Eastern China) in the previous week,

Rebar export offers inch down on limited buying interest-

-- The nations export offer moved down slightly by USD 2-5/MT as importers showed limited interest in buying amid competitive offers from other exporting nations.

-- Currently, Rebar export offers assessed at USD 440-450/MT FoB China as compared with USD 445-452/MT FoB basis in the previous week.

-- Meanwhile, the domestic prices declined by RMB 30/MT W-o-W basis to RMB 3,470-3,500/MT (Eastern China) when compared with RMB 3,500-3,530/MT (Eastern China).

Source: SteelMint Research