Chinese Domestic & Export Steel Pricing

Written by John Packard

Steel Market Update has been working on developing new sources to complement some of our original sources out of China. The following information is part of a report we receive once per week from two steel trading companies located in Asia and actively involved with the Chinese steel industry.

The first note is from one of our consistent trading sources who trades not only steel but also iron ore and other mill inputs. This source discusses the higher prices in China as well as Southeast Asia and European markets due to higher coking coal and stable iron ore prices. This source believes steel prices will move higher in these markets. He also notes the selling price of billets, many going to the Turkish market for conversion to rebar and other long products. Higher billet prices will make U.S. ferrous scrap prices go higher on the export markets. Here is what our #1 trading source had to say:

Coking Coal prices have doubled ++ and driving prices on uptick in China, SE Asia as well as in the EU…

Scrap prices we hear are about to jump as well from USD15-40/mt in Coming 1-2 weeks.

All of this is driving the markets now and IF there is no drastic reduction in Coking Coal and Fe prices in coming 2 months, prices for Slabs and Billets in 1Q 2017 will be USD400/mt!!

As you probably know, most Integrated mills carry 1-2 months of Fe Ore stocks and 2-3 months of Coking Coal and presently they are booking costs that are historic and very soon we will see RED FIGURES.

We now estimate Chinese mills have a price increase of USD60/mt on liquid steel, but product prices are behind that number.

Billets today have been sold at USD345-350/mt FOB ST. LSD, not USD335/mt FOB ST. LSD.

The following information is from a second trading source who has been supplying us with information for a number of weeks. Our primary source has reviewed the information and advised that it is correct although you need to be aware the data below is for the week of October 17th through the 23rd while the pricing above was as of today, October 27th.

Update China steel market (Oct 17 – Oct 23) as following (1 RMB/Yuan = $0.15 US dollar):

As mentioned in my last report, China main steel mills hope to keep market stable + most traders expect market will go up after long holiday (normally traders buy stock cargo before holiday and trust market will make a good beginning after holiday) + Tangshan government announced again to limit steel productions + prices of raw materials are very firm, hence sport market kept increasing in last week.

On Oct 17, Anshan Steel released their new EXW prices, details as following:

1, HRC up RMB50/MT, 5.75mm*1500*C in Q235 grade @ RMB3744/MT
2, CRC up RMB100/MT, 1.0mm*1250*C in SPCC grade @ RMB4802.85/MT
3, HDG up RMB100/MT, 1.0mm*1250*C in St01Z grade @ RMB5148/MT
4, PPGI unchanged, 0.5mm*1000*C in TDX51D+Z grade @ RMB6025.5/MT

On Oct 18, Shou Steel released their new EXW prices, details as following:

1, HRC up RMB50/MT, 4.75mm*1500*C in Q235 grade @ RMB3533.4/MT
2, CRC up RMB100/MT, 1.0mm*1250*C in SPCC grade @ RMB4855.5/MT
3, HDG up RMB100/MT, 1.0mm*1250*C in DX51D grade @ RMB5265/MT

On Oct 19, Benxi Steel released their new EXW prices, details as following:

1, HRC up RMB50/MT, 5.75mm*1500*C in SS400 grade @ RMB3322.8/MT
2, CRC up RMB150/MT, 1.0mm*1250*C in SPCC grade @ RMB4797MT
3, HDG up RMB200/MT, 1.0mm*1250*C in SPGC grade @ RMB5557.5/MT

Also Heibei Group and Shagang all increased their EXW prices in past week. Please note above prices are for domestic market and VAT included.

For export, trust you have noticed that China domestic market is very firm and domestic spot prices are higher than export prices, so export allocation from steel mills is too limited. Benxi only has 6500MT GI / 8000MT CRC / allocation for Dec shipment.

Below offered prices only for your reference:

HRC 5.5mm*1500mm*C in Q235B @ USD410/MT FOB
CRC 1.0mm*1250mm*C in SPCC @ USD470/MT FOB

For spot prices, Billets stood @ RMB2180/mt and some trader is offering @ USD335/MT FOB Tianjin port; Ⅱgrade Coke in Tangshan already stood @ RMB1670/mt which increased by RMB80/MT in past week and Platts index of 62% already stood @ USD59/MT. Please note Coke price – RMB1670 is the highest price in this year but only RMB690 at the beginning of this year.

SMU Note: 1 RMB (Chinese Yuan) = $0.15 US Dollar

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