Weekly: Chinese Steel Market Highlights

According to the General Administration of Customs, the total iron ore and pellet imports by the country recorded at 176.8 MnT for Jan-Feb’20 up by 1.5% as compared to 174.3 MnT in Jan-Feb' 19. Meanwhile, China’s finished steel exports tumbled by 27% Y-o-Y in the first two months of CY '20 to 7.8 MnT as compared to 10.698 MnT in Jan- Feb’19.

Spot iron ore prices fell towards weekend after an increase in mid-week-

-- Chinese spot iron ore fines price opened up this week at USD 88.85/MT, CFR China and increased to USD 91.9/MT, CFR China but later towards weekend prices fell to USD 89.5/MT, CFR China amid an expected rise in demand due to governmental measures in China.

-- In an announcement made by the State Council of China late Tuesday, the government “adopted a host of policies for facilitating the restart of business activities in the logistics sector, to help smooth the flow of economic activity.”

-- As per data compiled by SteelHome consultancy, Iron ore inventory at major Chinese ports dropped to 126.25 MnT as of 5th Mar as against 126.95 MnT assessed a week ago.

Spot pellet premium dropped W-o-W-

-- Spot pellet premium for Fe 65% grade pellets assessed at USD 29.70/MT, CFR China as against USD 32/MT, CFR China last week. Pellet premium witnessed a fall amid a shift towards comparatively less expensive products. This is because the end-users are not willing to pay a premium for improved efficiency at this point in time.

Spot lump premium gains over tight supplies-

-- Spot Lump premium for the weekend witnessed the rise to 0.3215/dmtu as against USD 0.2750/dmtu, week before. Lump premium depicted increase for the week on the back of tight supply and increasing lump utilization over pellets by end-users.

Seaborne coking coal prices decline marginally-

-- Seaborne coking coal prices fell this week in a recent deal concluded on Thursday amid lower bids and offers to hover in the Asian spot market.

-- In China, the spot seaborne market remained quiet as buyers adopted a cautionary approach since they are expecting seaborne prices to soften further on improved domestic supply.

-- Latest offers for the Premium HCC grade are assessed at around USD 159.50/MT FOB Australia, compared with USD 162.75/MT FoB basis a week ago.

-- Nevertheless, it is also possible that some steel shall restock which may support spot prices in the short run.

Domestic billet prices strengthen over improving sentiments-

-- This week, the country’s domestic billet market was settled at RMB 3,090/MT, ex-Tangshan, including VAT, up by RMB 30/MT against last week. The country’s market sentiments are recovering gradually.

HRC export offer remains stable weekly premise-

-- The Chinese HRC export offer remained stable on a weekly premise since the nation’s steelmakers are largely focusing on export trades owing to scarce demand in the domestic market.

-- However, importers are anticipating downside in HRC export offers amid competitive HRC offers from South Korea and Japan.

-- Currently, the HRC export offer stands around USD 470-490/MT FoB China, which was USD 475-485/MT in the previous week.

-- Meanwhile, the domestic HRC prices increased by RMB 20-30/MT to RMB 3,510-3,520/MT (Eastern China) in comparison with RMB 3,480-3,500/MT (Eastern China) a week ago.

Rebar export offers remain firm-

-- The current week Rebar export offers stood at USD 440-446/MT FoB China in line with USD 440-445/MT FoB basis a week ago. The gradual increase in the domestic market kept the export offers supported.

-- Meanwhile, the domestic market price ascended by RMB 40/MT and stood at RMB 3,410-3,440/MT (Eastern China) as compared to RMB 3,370-3,400/MT (Eastern China) in the preceding week on improved demand and optimistic sentiments in the domestic market.