Global steel, raw material prices fall further in Apr'24 amid slack demand

• Coking coal sees deepest drop, scrap bucks trend
  
  
• Demand for longs globally falls short of supply
  
  
• Will Chinese stock depletion help pull up prices?
  
  

Morning Brief: Global steel and raw material prices, except for scrap, slipped further into the red zone. Coking coal showed the sharpest m-o-m drop, reveals data maintained with BigMint.

Most hot rolled coil (HRC) prices fell m-o-m. Chinese offers dropped further by $7/tonne (t) or 1.3% to a six-month low of $536/t in April 2024 against $543/t in March. Japanese offers took cue from China to fall $17/t or 3% to $560/t ($577/t) while Indian mills saw their prices eroding by $21/t or nearly 4% to $562/t ($583/t). The Indian prices are at a 10-month low, hugging June 2023 offers of $568/t FOB.

In longs, Turkiye's rebar remained stable, dropping a mere $2/t to $593/t ($595/t). Black Sea billet export offers lost 1% at $503/t ($507/t).

All prices are on FOB basis.

In raw materials, Fe62% iron ore fines, CFR China, dipped about 1% to $109/t ($110/t), while the premium HCC coking coal from Australia, CFR India, eroded a significant 15% or $45/t to $255/t ($300/t).

HMS 80:20 scrap, CFR Turkiye, upped $4/t or 1% to $386/t ($382/t) in the month under review.

Factors that impacted prices in Apr'24

Global demand for flats weak

Demand for flat steels was weak. The Qinming holidays in China in early April and continuation of Ramadan, culminating in Eid in the second week, kept demand sluggish.

China: Chinese futures fell under the impact. As a result, Baosteel, after keeping HRC offers unchanged for April, decreased these by RMB 100/t ($14/t) for May sales.

India: Indian HRC export offers to Vietnam also dropped sharply by $38/t m-o-m to $567/t CFR HCMC amid tepid demand. Middle East was sluggish amid Ramadan and Eid. Europe continued to look dull. Indian mills undertook scheduled maintenance shutdowns which naturally reduced export allocations and kept offers on hold. Plus, some pre-election demand kept mills busy catering to home demand.

Japan: In Japan, domestic demand for flats was weak amid a slowly recovering auto sector. Infra and construction remained sluggish. Cheaper imports were a bother, while global appetite for flats was weak, forcing mills to lower their offers.

Demand lags behind supply in longs

The global longs market remained in under pressure from weak demand and China's aggressive exports. Demand continued to lag behind supply. Plus, the Red Sea crisis has been causing supply disruptions and reducing competition.

Black Sea billets get help from Chinese offers, Taiwan demand: Black Sea billets remained more or less stable in April, possibly because of two reasons. One, Russian billets were much in demand in Taiwan from late March. An impending hike in electricity tariffs, and which would push up steel-making costs, encouraged imports into Taiwan. Secondly, the increase in Chinese billet offers in early April with the rise in steel futures on SHFE. This hike was surprising because Chinese market fundamentals remained unaltered. But authorities, keen to give a helping hand to the steel industry, encouraged this price hike and offered support to CIS billets.

Turkish rebars see lesser enquiries in slow market: Turkish rebar offers also remained almost flat m-o-m because of Ramadan and Eid slowdown which led to a fall in enquiries. Secondly, the Turkish government has restricted the exports of 54 product groups to Israel, including rebars and wire rods. Around 9% of rebar exports went to Israel in January-February 2024. This has been pressuring down Turkish rebar export prices. The lira has further lost ground, although marginally, to the dollar in April m-o-m which will benefit exporters and thus Turkish mills are keen to keep their offers firm. The TRY is currently at 32.58 against 32.38 in end-March.

Iron ore dips on low Chinese demand: CFR China offers for Fe62% slipped 1% amid slack steel demand. China has likely hit a peak in its steel production and global pressures are mounting on the country to decarbonise its most polluting industries.

Flooding in South China also suppressed consumption, causing iron ore to soften. Seaborne shipments demand declined as buyers had completed their restocking ahead of the Labour Day holidays starting 28 April.

Scrap range-bound amid dull rebar demand: There was no major change in April prices versus March because of the subdued rebar demand, both domestic and exports. Ramadan and Eid-festivities kept demand slow. This led to some bid-offer disparities. But offers are rising now, as mills are restocking and sellers are firm on not reducing offers due to slow collection rates in Europe.

Coking coal slips on disinterest from Indian buyers: Demand from India was muted, with end-users well stocked-up. Thus, there was little urgency in procuring additional cargoes. Buyers preferred to rely on spot purchases if needed, due to an increase in supply. The supply glut contributed to the downward pressure on prices. Meanwhile, demand from China was also subdued.

Outlook

Steel inventories at Chinese mills showed a decline in mid-April m-o-m and y-o-y. This spells good news for Chinese steel prices and can have a rub-off effect on offers globally. Iron ore too may get a leg-up.

But rumours related to a Chinese crackdown on HRC deals without VAT can have some ramifications on trades or prices.

In scrap, Turkish mills were seen restocking as they need to take care of the upcoming production cycle. This can keep scrap supported.