China Steel Market Highlights- Week 50, 2018

Rebar prices witnessed downtrend over seasonally weak demand.However coking coal offers remain range bound.Iron ore prices inched up towards the weekend.

As per the data released by National Bureau of statistics China's crude steel output was recorded at 77.62 MnT in Nov’18 drop by 6% against to 82.55 MnT in Oct’18.Output has lowered and hit 7-month low as prior to this lowest was seen in the month of Mar’18 when output stood at 73.98 MnT. Amid imposed steel capacity cuts and falling steel margins, mills reduced output.

China’s major steelmaker - Baosteel has announced sharp price cut in flat steel for January deliveries.The company has slashed flat steel prices by upto RMB 200-300/MT for all the flat steel products.

Shagang Steel has raised its scrap purchase price by RMB 100/MT (USD 14.5) effective from 13th December delivery. Amid rising finish steel prices in the domestic market, steelmaker has lifted scrap prices after witnessing almost six price cuts in Nov'18.

China’s top steelmaking city, Tangshan in Hebei province has ordered steel mills and other industrial plants last week to make additional output cuts to those who were already ordered during the winter heating season. The steel mills in smog-prone Tangshan city will be required to shut their sintering capacity by 30-60% or even shut down the mills based on their emission level.

Chinese spot iron ore prices moved up towards weekend-Chinese spot iron ore prices opened up this week at USD 66.8/MT, CFR China and increased to USD 69.9/MT towards the weekend.Amid narrowing steel margins,mills have increased preference for lower grade ore over high grade ones.However, the Iron ore inventory at Chinese major ports increased to 137.10 MnT against 136.2 MnT a week before.

Spot lump premium moved up this week- Spot lump premium witnessed increase for the week at USD 0.3200/DMTU as against USD 0.3130/DMTU last week. The preference for lumps is rising due to sintering cuts announced in city of Tangshan. Besides this the resumption at Transnet’s railway operation has increased availability of South African lumps, which can serve as substitute to pellets in blast furnace to lower production cost.

Spot pellet premium increased by USD 2.55/DMT W-o-W-Spot pellet premium for Fe 65% grade pellets assessed at USD 49.10/DMT, CFR China this week, up by USD 2.55DMT W-o-W against USD 46.55/DMT /DMT a week before. Buying interest for pellet still remains weak as it remained expensive as compared to fines and lumps.Pellet inventory at major Chinese ports witnessed at 2.8 MnT as against 2.6 MnT a week ago.

Coking coal prices remain range bound - Seaborne premium-grade coking coal prices from Australia remain largely stable over lackluster demand from buyers in China.However Chinese met coke producers have made a proposal to the steel mills to increase their selling prices for the raw material.

Thus,premium HCC coking coal prices are heard around USD 227/MT FoB Australia.However last week the same was heard around USD 226/MT FoB basis.

Domestic billet prices in China edge up - Domestic billet prices in China moved up towards end of this week following gains in futures market over announcement of steel capacity cuts in Tangshan and Xuhzou. Current assessment for billet stands around RMB 3,370/MT (including VAT).

Chinese HRC prices up in domestic market;subdued trading in exports- Chinese HRC export offers continued to remain on lower side despite gains in the domestic prices.Since the buyers have started restocking the material which led to uptrend in domestic HRC prices.

Thus domestic HRC prices moved up by RMB 110/MT W-o-W basis.Presently domestic HRC prices is around RMB 3,820-3,830/MT ex-works (Eastern China).Last week the prices was assessed at RMB 3,710-3,720/MT (ex-works) in Eastern China.

However prices in export market continued to remain on lower side.Currently HRC export offers from China is assessed around USD 475-480/MT FoB basis.

Chinese re-bar export offers move down on weekly basis- Nation’s re-bar export offers fell further amid weakening prices in domestic market.However seasonally weak period from Dec to Jan leads to dull sentiments in domestic market.

Currently, nation’s re-bar export offers are at USD 475-480/MT FoB China.Last week rebar export offers was assessed at USD 480-485/MT FoB basis.

Domestic rebar prices fell by RMB 80/MT on weekly basis and is assessed at RMB 3,780-3,820/MT in (Eastern China) as compared to RMB 3,880-3,920/MT (Eastern China) in beginning of the week.

Meanwhile buyers are hesitant to book the material as re-bar prices will decline further in domestic and export market.