China: Iron ore futures rebound on improved steel margins

 

Dalian iron ore futures on 26 Jul’21 picked up by 1.1% d-o-d with improvement in Chinese steel margins. Steel futures remained supported by positive sentiments, moving up by 0.2% as against the last trading session on 23 Jul. Closing prices of the most-traded ferrous futures contracts are:

  • DCE iron ore futures Sept contract closed at RMB 1,136.5/t ($175) (+12.5)
  • SGX iron ore futures Aug contract closed at $198.15/t (+0.65)
  • SHFE rebar futures Oct contract closed at RMB 5,687/t ($877) (+RMB 16)
  • SHFE HRC futures Oct contract closed at RMB 5,990/t ($924) (+RMB 22)

SteelMint: India’s domestic steel scrap index inches up by INR 200/t on supply constraints

 

SteelMint’s domestic steel scrap index further moved up by INR 200/tonne (t) to INR 37,800/t DAP Mandi Gobindgarh. Marginal improvement in semi-finished steel prices amid inadequate interstate supply movements, especially in the Delhi NCR region, led to a demand hike by virtue of which prices were slightly supportive today.

However, a few trade participants are expecting the conversion spread to stabilize at INR 11,500/t in the near term from the current levels of INR 11,500-11,800/t.

Today, 10 sets of trades, indicative prices/bids/offers were recorded in the publishing window.

The Index also derives the HMS 80:20 scrap (Heavy, Med), and CR Sheet cutting prices traded in the region.

Scrap Grade and Spread Calculation: (Mandi Gobindgarh)

Steelmint : India's domestic steel scrap index

Prices in INR/t, DAP (Delivered at Plant)

To see SteelMint’s Melting Scrap Assessment, pricing methodology and specification documents, Click here

What is SteelMint Indian scrap index – SteelMint’s assessment of Mandi scrap reflects the prices of different melting HMS grade generated and traded in the domestic market. SteelMint gathers and verifies information from buyers and sellers active in the physical spot market. The data obtained by SteelMint, are normalized for yield, dimensions, density, location and other terms of trade to the specifications.

Why this index? India’s National Steel Recycling policy mentioned that the efficient use of scrap for steel production becomes very crucial for India as 35-40% share has been envisaged from scrap-based steel production in the journey of 300 mn t pa by 2030. This shall increase the requirement of steel scrap sharply from the present level of around 30 mn t.

Methodology – Market data, including deals, bids, and offers that meet the delivery and quality criteria are considered for price assessments. The highest importance in the price calculation process is assigned to confirmed deals (T1) where either a buyer or seller has provided details of the transaction. Deals of only reputed and trustworthy producers and trading firms are included in the price collection and calculation process. Indicative prices, confirmed bids and offers are also considered valuable for the pricing process (T2). The index has been calculated using an average of T1 and T2 price inputs.

To provide feedback on this index or if you would like to contribute by becoming a data partner, please contact – info@steelmint.com.

World crude steel production up 11.6% y-o-y in June’21

 

The aggregate crude steel production of 64 countries stood at 167.90 million tonnes (mn t) in June’21, as per data released by the World Steel Association (worldsteel).

The output volume increased by 11.6% against 150.45 mn t a year ago. Recovery in most of the global economies in CY’21 and the global spread of Covid-19 during Mar-June’20 with stringent lockdowns is relatable to this increase.

In Jan-June’21, the accumulative output stood at 1,003.90 mn t, up 14.4% y-o-y.

SteelMint analyses production of the top three steel producing nations:

1. China’s crude steel output up 6.6%: China’s steel output stood at 93.90 mn t in June’21, up by a mere 1.5% against 92.51 mn t in the corresponding period last year (CPLY). There were several factors that restrained growth in China’s steel production.

  • Production cuts: The government’s prime focus on improving air quality has largely impacted production volumes in both years. However, continual extension of production curbs after Sept’20 played a major role.
  • Restricting exports to bring down excess capacities: The largest steel producer in the world took the path of cutting out excess capacities, with the government intervening by removing the export rebates of 13% from steel products effective from May’21. Further, the government openly stated its intent to levy an export tax by end-May’21 but is yet to come up with an official announcement on the same.

During H1CY’21 (Jan-Jun), China’s crude steel output aggregated to 563.30 mn t, up 11.8% y-o-y compared with 503.85 mn t in CPLY.

2. India crude steel output up 21.4% y-o-y: India, the second-largest steel producing nation, churned out 9.40 mn t more in June’21 against 7.74 mn t in the preceding year.

The country continued to battle the fierce second wave of Covid with sporadic lockdowns and limited hours of market activities since new cases picked up pace in early Mar’21. However, increased speed of vaccinating citizens in the country led to a gradual opening up of the markets by June.

a) Ramp-up in capacity utilisation rates: Major private Indian steel producer JSW managed to keep its utilisation rate at 91% in June’21, significantly up against ~25% in CPLY and 76% in June’20.

The production volumes had slumped last year owing to stringent lockdowns across the country and the labour exodus. However, the company raised its capacity utilisation rate in CY’21 due to improved downstream demand with a gradual return of labour this year.

b) Steep hike in export offers on the year: Higher demand along with higher realisations in the overseas markets, especially the UAE, Vietnam and Europe, led to a steep hike in Indian HRC export offers.

SteelMint’s Indian HRC FoB export offers spiked to $989/t FoB east-coast basis in June’21 contrasted against $435/t FoB in the same period last year. However, these have come down from the highs of $1,027/t FoB in May’21.

Meanwhile, during H1CY’21, output moved up 31.1% to 57.90 mn t against 44.10 mn t in CPLY.

3. Japan’s crude steel production spurts 44.4% y-o-y: Japanese mills produced 44.4% more of crude steel at 8.10 mn t in June’21 in comparison to 5.61 mn t in CPLY. Also, in Jan-June’21, production rose by 13.8% y-o-y to 48.10 mn t compared to 42.27 mn t in Jan-June’20.

The country has been on a recovery track with manufacturing activities picking up with the easing of Covid concerns although some restrictions are still there.

Meanwhile, infrastructure and other construction activities linked to Tokyo Olympic preparations were expedited which boosted demand a bit during the term.

Outlook
Steel production across the globe shall see a shift as the world’s largest producer, China, is cutting down on capacities to meet the carbon neutrality status by 2060. But other nations are looking to add more capacities. The Indian steel industry is working towards expansion with steel demand forecasted to improve in the coming years.

Thus, it would be interesting to see how much of a difference this shift will bring in the overall steel production volume in the near future.

South India-based major mill offering granulated pig iron

 

Sources from a Karnataka-based primary mill have reported that offers for granulated pig iron (GPI) are at INR 37,250/t exw. The plant has recently started offering GPI in the merchant market and is heard to be supplying to Maharashtra- and Gujarat-based plants. Meanwhile, steel grade pig iron offers through traders have been reported at INR 40,000-40,200/t FoR Hyderabad. Domestic pig iron prices are going strong due to limited supply by state-run plants at a time of robust demand from domestic and global buyers.

Global iron ore and pellet export shipments

Global iron ore and pellet export shipments up 5% in Jun’21

 

The world’s cumulative iron ore and pellet export shipments for Jun’21 were recorded at 132.8 mn t, registering an increase of 5% m-o-m as compared to 127 mn t in May, according to data maintained with SteelMint.

  • Australia remained the top exporter at 75.4 mn t vis-a-vis 74.6 mn t in May.
  • Other major exporters were Brazil and South Africa at 33.7 mn t and 5.4 mn t respectively.

Vietnam: Coal imports to drop in Jul’21 as COVID-19 cases surge

 

Vietnam’s coal imports are likely to decline in Jul’21 as COVID-19 cases in the country have grown at a fast pace since 7 July. While various provinces in the country are already under lockdown, the Vietnamese government has suspended some industrial activities too. Data from the country’s state-owned electricity company, EVN, show that the lockdown in July so far has led to a 15% drop on week in Vietnam’s average daily power generation in the third week of the month. The decrease is bound to weigh on coal consumption and imports from Vietnam.

Vietnam: Coal imports to drop in Jul’21 as COVID-19 cases surge

 

Vietnam’s coal imports are likely to decline in Jul’21 as COVID-19 cases in the country have grown at a fast pace since 7 Jul. While various provinces in the country are already under lockdown, the Vietnamese government has suspended some industrial activities too. Data from the country’s state-owned electricity company, EVN, show that the lockdown in July so far has led to a 15% drop on week in Vietnam’s average daily power generation in the third week of the month. The decrease is bound to weigh on coal consumption and imports from Vietnam.

Japan’s Steel Exports in 2020 vs 2019

 

Japan’s steel exports decreased by 4.6% to 29.91 mn t in CY2020, against 28.55 mn t in CY2019. South Korea stood as the largest importer of finished long products during the year at 0.75 mn t, up 4.2% y-o-y. China stood as the largest importer of finished flat materials at 3.97 mn t, down by 1.24% y-o-y. Taiwan is the largest importer of billets at 1.24 mn t, down by 6% y-o-y.

China ferro chrome prices

China: Tsingshan hikes ferro chrome purchase price for Aug’21

 

Stainless steel major, China’s Tsingshan, has raised purchase price for HC 50% ferro chrome by a steep RMB 2,400/t ($370/t) m-o-m to RMB 10,795/t ($1,664/t) for Aug’21 deliveries. The increase can be attributed to an acute shortage of ferro chrome in the Chinese market. Meanwhile, the increasing cost of UG2 is also supporting ferro chrome prices. Current offers in the Chinese market are at around RMB 11,000/t (1,696/t) exw.