Posted on 02 Apr 2021
After during the stress on soaring raw materials price, the Chinese steel mills have been enjoying some care-free days with steel margins improving when the country’s finished steel prices have been strengthening while coke price has been slipping fast since late February, both due to the twists in their fundamentals.
China’s HRB400 20mm dia rebar, for example, surged to its a 9.5-year high of Yuan 4,911/tonne ($748.4/t) on March 30, though it eased a bit to Yuan 4,902/t on March 31, it was still on a high note with the monthly price increment at Yuan 214/t, according to Mysteel’s assessment. In contrast, the country’s national composite coke price retreated by Yuan 578.2/t to Yuan 2,068.8/t including the 13% VAT as of March 31, or a 4.5-month low.
Fundamentally, China’s domestic steel demand has finally picked up since March, and Mysteel’s tracking on daily trading of construction steel such as rebar and wire rod showed that the volume among the 237 surveyed domestic steel traders gradually had hit and surpassed the 200,000 t/d threshold by March, confirming the start of steel consumption peak season.
On the other hand, the anticipation on lower supply has been reinforced when Tangshan in North China’s Hebei Province has imposed restriction on its 23 local steel mills since March 20 until the yearend, curbing their operative blast-furnace capacities by 30% or 50% over the period.
The restrictive measure in Tangshan has also ignited the market anticipation on the other local authorities to follow suit, though so far, this has not materialized.
Coke, however, has been experiencing the exact opposite, with supply on the rise while the procurement from the steel mills subsiding, as steel mills have stocked up quite some volumes along the way when the price had been strengthening since last August, and the demand from Tangshan has been jeopardized with the ongoing restriction.
By March 30, the Chinese steel mills forced their coke suppliers to trim the coke prices by Yuan 800/t since late February via eight rounds of cuts.
Source:Mysteel Global
