Posted on 24 Jan 2022
Chinese steel prices moved up w-o-w on the back of restocking activities ahead of the Lunar New Year holidays alongside the easing monetary policies of the central bank providing a boost to the market sentiments.
1. China spot iron ore prices increase w-o-w: Chinese spot iron ore fines Fe 62% prices opened at $124/t CNF China for the week and assessed at $137.4/t, CNF China towards the weekend. The w-o-w increase in prices was brought by speculative demand.
In the seaborne market, March arrival cargoes continued to pique the interest of market participants, with several trades for both medium and low-grade fines being picked up. However, import margins were still poor, especially for mainstream medium-grade fines. According to an international trade source, “Low-grade fines like Super Special fines and lump still see import margins, but medium-grade fines and even high-grade fines are making losses.
a) Spot pellet premium inches up: Spot pellet premium for Fe 65% grade pellets was assessed at $58.65/t, inching up as against $58.4/t last week.
b) Spot lump premium down w-o-w: Spot lump premium was seen at $0.2475/dmtu, against $0.2950/dmtu last week. Sources saw a decrease in the interest for seaborne lump as mill margins trended lower. However, other sources saw it as a temporary decrease as mills reduced purchases in lieu of the Spring Festival (Lunar New Year). However, portside lump transactions were still robust with mills still maintaining a high ratio of usage.
2. Coking coal prices up by $25/t w-o-w: Seaborne coking coal FOB prices rose by $25/t w-o-w basis amidst tight supply. Weather-related concerns in Australia continued to weigh on market sentiments. Offers in the spot market were limited while demand from the ex-China market strengthened with the start of CY’22.
The latest price for the premium HCC grade is assessed at around $429/tonne (t) FOB Australia.
3. China’s billets prices up towards the weekend: Steel billet prices in China’s Tangshan witnessed a marginal increase of RMB 10/t ($1/t) w-o-w. Domestic billets prices stood at RMB 4,440/t ($700/t), inclusive of 13% VAT, on 21 Jan’22. According to data maintained with SteelMint, the Chinese SHFE rebar futures contract for May’22 delivery closed at RMB 4,711/t ($743/t) on 21 Jan’22, a w-o-w rise of RMB 47/t ($7/t). However, the same witnessed a slight decrease of RMB 2/t ($0.32/t), d-o-d.
4. HRC export offers unchanged w-o-w: Chinese mills kept their HRC offers unchanged at $760-770/t FOB China for the fourth week in a row. Early exits by the market participants on approaching Lunar New Year holidays, along with lower offers from other exporting nations resulted in dull demand for Chinese origin cargoes in the overseas markets.
In the domestic market, HRC prices moved up by RMB 40/t ($6) to RMB 4,940-4,960/t ($779-782) eastern China as against RMB 4,900-4,920/t ($773-776/t) eastern China a week ago. This increase was supported by the sharp gains in the futures market and with People’s Bank Of China slashing lending rates such as five-year Loan Prime Rate (LPR) down by 5 points to 4.6%, marking it the first cut since Apr’20 along with one-year prime rate loans lowered by 10 basis points to 3.7% following a 5-basis point cut a month ago.
5. Domestic rebar prices rise RMB 120/t w-o-w: Domestic rebar prices rose by up to RMB 100-120/t on the back of LPR cut because the five-year loan rates are related to housing mortgage interest rates, therefore a decrease shall boost the housing market whose raw material is rebar. Moreover dropping inventories raised concerns in some parts of China.
Current week prices are at RMB 4,700-4,740/t ($741-748/t) northern China in comparison with RMB 4,580-4,640/t ($723-732/t) northern China a week ago.
Source:SteelMint
