Chinese Steel Market Highlights- Week 28, 2019

Nation’s HRC and Rebar export offers fell marginally this week. Meanwhile iron ore prices declined towards the weekend.Coking coal offers witnessed further decline over weak buying interest from China. However billet export offers increased over uptrend in domestic prices.

China’s major steelmaker Baosteel announced hike in HRC (SS400 5.5mm*1500*C) price by RMB 100/MT for August deliveries.

According to General Administration of Customs,China’s finished steel exports witnessed an increase of 2% in (Apr-Jun) Q2CY’19 and stood at 17.37 MnT. However on monthly basis the same declined by 8% to 5.36 MnT in Jun’19.

Meanwhile,Chinese iron ore imports for the month of June’19 fell to 75.18 MnT, down 10% as against 83.75 MnT in May’19. Imports in June’19 witnessed lowest since Feb’16 imports recorded at 74.78 MnT amid supply constraints.

Chinese spot iron ore prices down W-o-W- Chinese spot iron ore prices opened up this week at USD 117.75/MT, picked up to USD 123/MT, CFR China during the week and later fell to 119.25/MT, CFR China, towards weekend.

Iron ore prices picked up during the week owing to material shortage amid reduced shipment from Australian miners last week.However, the iron ore prices this week witnessed drop against record levels witnessed last week at USD 126/MT,CFR China.

As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports fell to 115.35 MnT as compared to 115.6 MnT a week ago.

Spot lump premium falls week-on-week- Spot lump premium this week witnessed fall to USD 0.3650/DMTU as against USD 0.4118/DMTU assessed last week due to rainfall in central China,rendering lumps nonviable to be used directly in blast furnace.Chinese steel mills preference for lumps is reduced amid high prices and availability of comparatively less expensive pellets.

Spot pellet premium fell W-o-W- Spot pellet premium for Fe 65% grade pellets assessed at USD 22.90/MT, CFR China as against USD 20.96/MT, CFR China a week before.

Pellet inventory at major Chinese ports dropped to 4.9 MnT compared with 5.05 MnT last week. The production curb in Tangshan have been extended by two months from Aug’19 to Oct’19 paving way for further price hike and preference for pellets.

Coking coal offers fell further on weekly basis- Seaborne premium low-volatile hard coking coal prices edged down further this week as Chinese mills refrained themselves of making any bookings in large volumes in recent week amid falling steel prices.

Meanwhile demand for coking coal also reduced amid falling profit margins among Indian steel mills.

Latest offers for the Premium HCC grade are assessed at around USD 184.00/MT FoB Australia and USD 189.75/MT a week ago.

China domestic billet prices increase sharply W-o-W- This week Chinese domestic billet prices settled at RMB 3,640/MT, up RMB 20/MT against last week. This week, billet trade sentiments in China were reported strong.

Meanwhile Chinese government imposed environmental restrictions on blast furnace production.Thus to fill this gap Chinese steel manufacturers have now started importing billets from Turkey, Iran, Qatar, Russia and Malaysia.

Recently, one of the prime steel manufacturers from China has booked around 0.2-0.3 MnT billet at USD 440-450/MT CFR China from the Middle East for Jul’19 shipment.

Chinese HRC export offers inched down- Chinese HRC export offers inched down this week owing to low buying interest prevailing among overseas buyers.

Also,overseas buyers are bidding on lower side and are reluctant to book material at higher prices with the anticipation of further decline in prices.

Currently nation’s HRC export offers declined by USD 5-10/MT W-o-W basis and stands at USD 507-510/MT FoB basis against USD 510-520/MT FoB basis in preceding week.

On weekly basis domestic HRC prices in China stood at RMB 3,850-3,860/MT in eastern China (Shanghai) this week; slide down by RMB 30-40/MT which was RMB 3,880-3,900/MT in eastern China (Shanghai) in previous week.

Chinese rebar export offers moved down on weekly basis- This week nation’s rebar export offers fell on weekly basis over low demand.Meanwhile overseas buyers have also adopted wait and watch mode in anticipation of further fall in Rebar prices

Currently nation’s rebar export offers registered at USD 515-520/MT FoB China inched down by USD 2-5/MT against previous week. Last week the offers were at USD 518-522/MT FoB basis.

Meanwhile domestic rebar prices stood at RMB 3,980-4,000/MT (Eastern China) which was RMB 3,970-4,000/MT (Eastern China) in last week.