Chinese Steel Market Highlights - Week 2, 2018

This week China’s Ministry of Industry and Information Technology (MIIT)
has announced capacity replacement policy for the steel industry to tackle the problem of surplus production in China. The policy will be effective from 1 Jan’18.

The new measure requires one ton of new capacity to be built for a minimum of 1.25 tonnes of old capacity closed in China’s Beijing, Tianjin, Hebei, Shanghai, Jiangsu, and Zhejiang province and nine cities in Guangdong province that are environmentally sensitive.

Rebar and flat steel export offer remained largely stable over volatile futures and seaborne iron ore prices reported hike this week. Also, China’s Baosteel has kept the flat steel prices unchanged for Feb and March shipments post implementation of increased prices in the month of January.

Seaborne iron ore prices moved up - Seaborne iron ore prices in China increased as a measure of restocking done by steel mills ahead of Chinese New Year Holidays in mid Feb’18, hike in iron & steel futures and anticipated supply disruption from Australia’s Port Headland owing to cyclones. Fe 62% fines prices climbed to USD 79.4/MT, CFR China on 11 Jan’18 which was at USD 75/MT, CFR China in the beginning of the week.

Spot lump premium fell to USD 0.0896/DMT, CFR China. Pellet premium declined sharply to USD 39.3/DMT, CFR China.

Coking coal prices decline marginally post year-end holidays-Australian coking coal miners have resumed their mining post year-end holidays.This will resolve the issue of tight supply which overseas buyers were facing since the last couple of weeks.However weak purchases and resumption in production have lead to a decline in coking coal offers from Australia.

Currently, Premium HCC prices were assessed at around USD 259.25/MT FoB Australia, which was heard at USD 262.25/MT last week.

Chinese domestic billet offers fall - Chinese domestic billet offers declined and stood at RMB 3,550/MT (ex-works, including 17% VAT) against RMB 3,680/MT in the beginning of the week.

China HRC export offers remained largely stable over past week- Chinese HRC export offers moved up marginally in the beginning of the week.However, by the end of week prices started falling amid volatile futures.

Meanwhile, Baosteel has kept the prices unchanged for next two months looking at stability at domestic flat steel prices since a month’s time.

Currently, HRC commercial grade ASTM A36 export offers are prevailing in the range of USD 570-575/MT, FoB China. Major mills in China are offering HRC on the higher side which is heard in the range of USD 580-590/MT FoB basis.

Prices of HRC in the domestic market are hovering in the range of RMB 4,160-4,200/MT (Eastern China) including VAT & other taxes.

Chinese Re-bar export offers remained stagnant- Chinese Re-bar export offers remained largely stable since rebar production lines are going for maintenance this month. Also, market participants mentioned that bearish sentiment in domestic market continues to weigh on export prices.

Currently, nation’s re-bar export offers are at USD 560-580/MT on FoB basis.
However, markets participants mentioned that bids were heard at USD 550-555/MT FoB basis but no major deals have been concluded yet.Although buyers are anticipating a drop in export offers ahead of Chinese new year holiday in mid-February.

Steel Raw Material & Finished Steel Prices in China

Source-SteelMint Research