Weekly: China steel market highlights

This week Chinese steel prices exhibited mixed sentiments because of the on-going production restrictions enacted by the central govt. to control carbon emission.

Meanwhile, continued uncertainties regarding export rebate cuts led to stronger steel prices in the domestic market. However, towards weekend domestic billet prices fell on the back of a decline seen in SHFE rebar futures contract.

Input material viz. iron ore and billet prices along with rebar surged. Meanwhile, HRC export offers remained range-bound and coking coal dropped during the week.

China's largest EAF steelmaker- Shagang Steel has raised scrap purchase price today by RMB 80-100/t ($12-15) for all grades, reliable sources have reported to SteelMint. The company has increased its price in just two days. Earlier this week, it had raised the price by RMB 30.

Product-wise market sentiments are mentioned below-

1. Chinese spot iron ore prices up during the week- Chinese spot iron ore prices opened at $167.7/t, CFR China and increased to INR 172.35/t, CFR China towards weekend. The iron ore prices edged up on strong steel demand in China. The dropping coke prices in China helped to lower overall raw material costs and open up the budget for higher quality iron ore.

Many mills outside of Tangshan were heard to have increased the ratio of higher-grade materials in their blends, to maximize productivity given the strong steel margins.

As per data compiled by SteelHome consultancy, iron ore inventory at major Chinese ports was recorded at 134.3 mn t as against at 134.35 mn t assessed a week ago.

• Spot pellet premium down w-o-w- Spot pellet premium for Fe 65% grade pellets assessed at $61.45/t as against $64.65/t assessed last week. High Fe content and low alumina pellet cargoes were still in demand by the market, but cargoes with more than 3% alumina faced increased selling pressure and thin liquidity.
  As per data compiled by SteelHome consultancy, pellet inventory at major Chinese ports recorded at 5mn t as against at 5.25 mn t assessed a week ago.
  
  
• Spot Lump premium up w-o-w- Spot Lump premium was witnessed at $0.5735/dmtu as against $ 0.5375/dmtu assessed last week. The high steel margins and the lower alumina content for mainstream lump helps to support lump demand as mills look to optimize production efficiency. Lump was still in good demand at the port, but weaker expectations in May are pressuring some sellers to lower their offer levels.
  
  

2. Coking coal prices dropped w-o-w over weak demand-Seaborne coking coal prices retreated further this week on limited trading amid weak demand.

The latest offers for the Premium HCC grade are assessed at around $110.00/t FoB Australia in contrast with $112.50/t FoB basis a week ago.

3. Chinese domestic billet prices hit new-high- This week, the Chinese domestic billet prices rose to a new high. The ongoing production cuts are continuously pulling up the prices. Yesterday, the domestic billet prices settled at RMB 5,040/t ($769/t), ex Tangshan, including 13% VAT, up by RMB 80 ($12) w-o-w.

4. HRC export offers on a hold over export rebate cut- Chinese mills had kept HRC export offers on hold this week in anticipation of the announcement on export rebate cut on 10th Apr '21.

The domestic market prices for HRC remained range-bound at RMB 5,460-5,490/t (Eastern China) as against RMB 5,460-5,520/t (Eastern China) in the previous week. The mixed market sentiments over falling futures during the week and announcement regarding the export rebate cut kept the market prices volatile.

Also, the market participants rushed to restock this week after the 3-day Qing-Ming festive holiday at the end of the previous week.

Meanwhile, Baosteel raised HRC prices by RMB 400/t ($61), Heavy plates prices increase by RMB 500/t ($76) and CRC moved up by RMB 150/t ($23) for May delivery

5. Domestic rebar price rises w-o-w- Rebar producers were offering at RMB 5,140-5,180/t (Northern China), up by RMB 160-180/t w-o-w in comparison with RMB 4,980-5,000/t (Northern China) a week ago.

Rising cost of input material (billet) and optimistic demand from construction sites over mild weather supported the higher prices.