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Weekly round-up: Chinese steel prices fall further, banks cut rates to boost real estate market

This week, Chinese steel prices witnessed a downward trend on the back of dull demand despite the government’s stimulus to boost sentiments. Leading steel mill ...

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21 May 2022, 17:57 IST
Weekly round-up: Chinese steel prices fall further, banks cut rates to boost real estate market

This week, Chinese steel prices witnessed a downward trend on the back of dull demand despite the government's stimulus to boost sentiments. Leading steel mill Shagang Group rolled over steel prices for end-May sales.

Also, China's crude steel production went down 5.2% to 92.78 million tonnes (mnt) in April 2022 as compared to 97.85 mnt in the same period last year.

Product-wise sentiments:

1. China spot iron ore prices increase w-o-w: Chinese spot iron ore fines Fe 62% prices opened at $130.15/t CNF China for the week and were assessed at $136.25/t, CNF China towards the weekend. Seaborne iron ore prices rose as mortgage rates in China dropped, boosting the demand outlook, particularly in the construction sector, because it would benefit the property market.

This resulted in an increase in seaborne buying interest as sources anticipate an increase in iron ore demand as steel demand rises.

Iron ore inventory at major Chinese ports stood at 141.75 mnt this week, decreasing by 3.6 mnt as against 145.35 mnt a week ago, as per SteelHome data.

a) Spot pellet premium up w-o-w: Spot pellet premium for Fe 65% grade pellets was assessed at $39.85/t, moving up against $37.25/t last week.

b) Spot lump premium increases w-o-w: ?Spot lump premium stood at $0.3445/dmtu, increasing from $0.2700/dmtu last week.

2. Coking coal prices rise w-o-w: Seaborne coking coal prices rose up to $10/t amid improved buying interest and supply crunch induced by rains. The latest price for premium HCC grade is assessed at $525/t FOB Australia against $515/t FOB in the previous week.

3. China's billet prices fall towards weekend: Steel billet prices in China's Tangshan witnessed a sharp fall of RMB 150/t ($22/t) w-o-w. Prices stood at RMB 4,510/t ($674/t), inclusive of 13% VAT, on 20 May. According to data maintained with SteelMint, the Chinese SHFE rebar futures contract for October 2022 delivery was closed at RMB 4,638/t ($695/t) on 20 May, witnessing a fall of RMB 32/t ($5/t) w-o-w. However, the same rose by RMB 59/t ($9/t), d-o-d.

4. HRC export offers drop $10/t w-o-w: China's HRC export offers dropped by $10/t w-o-w. Major factors that weighed on offers were bid-offer disparities, appreciating USD against other currencies, and competitive offers from other exporting countries, such as Middle East and Turkey. China's current HRC export offer stands at $810/t FOB China as against $820/t FOB a week ago.

In the domestic market, HRC prices rose marginally by RMB 10-20/t ($1-3/t) to RMB 4,820-4,840/t ($721-724/t) eastern China compared to RMB 4,800-4,830/t ($718-723/t) eastern China, a week ago.

Factors boosting domestic sentiments:

  • The recent revision of mortgage rates by 20 basis points (bps) for first time home buyers, by China's central bank and insurance regulators.

  • Shanghai province is likely to resume business activities from June 2022, after remaining in lockdown amidst Covid-19 since April.

  • SHFE HRC futures rose by RMB 30/t ($5/t) w-o-w to RMB 4,756/t ($711/t) for October 2022 contract, as assessed on 20 May.

5. Domestic rebar prices fall w-o-w: Lower buying interest weighed on China's domestic rebar market, pushing prices down by RMB 110/t ($16/t) to RMB 4,750-4,790/t ($711-717/t) northern China against RMB 4,860-4,900/t ($727-733/t) northern China last week. In addition, the National Bureau of Statistics released that new housing starts totalled 397.39 billion square meters in the first four months of 2022, down by 26.3% from CPLY, which also impacted SHFE rebar futures and spot prices.

6. Shagang's long steel prices unchanged: China's Shagang Steel rolled over long steel products prices for end-May'22 sales. Effective prices:

  • Rebar (16-25 mm): RMB 5,350/t ($799/t)

  • Wire rods (6-10 mm): RMB 5,310/t ($793/t)

  • Coiled rebar (8-10 mm): RMB 5,400/t ($807/t)

Weekly round-up: Chinese steel prices fall further, banks cut rates to boost real estate market

 

21 May 2022, 17:57 IST

 

 

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