WEEKLY: China's steel export prices and sales spike

China's steel export prices continued to climb and sales surged last week, with the geopolitical tension between Russia and Ukraine causing disruptions to the global supply chain and thus increased demand for China-origin steel products, according to market sources on March 8.

The prevailing transaction price of China-origin SS400 4.75mm hot-rolled coil (HRC) under Mysteel's assessment climbed to a four-month high of $850/tonne FOB from North China's Tianjin port as of March 4 after gaining $48/t on week.

Meanwhile, the corresponding price of SPCC 1.0mm cold-rolled coil (CRC) increased $36/t on week to $918/t FOB Tianjin port as of March 4, according to Mysteel's assessment.

Mysteel's survey across 13 steelmakers and 21 steel export trading companies in China indicated that over February 28-March 4, their HRC sales generally tripled or even quintupled from the prior week, while sales of CRC and its downstream galvanized steel remained largely flat.

The stoppage at steel mills in Ukraine and the suspension of international steel trade of Russia amid the ongoing conflict have cut steel supplies to Europe, who then turned to alternative suppliers such as Turkey, India, South Korea, Japan and even Vietnam.

And this has "led to an immediate surge in steel prices in these countries," according to a Shanghai-based analyst who has been observing the international steel trading.

For example, in India, three deals in HRC exports have been concluded with European countries for April deliveries since mid-February. The first deal was sealed at $965-967/t CFR, followed by $1,020-1,025/t CFR and the latest at $1,060/t CFR, and fresh offers were being heard at around $1,100/t CFR, according to SteelMint, an India-based market intelligence provider.

"Although China's direct (steel) exports to Europe - HRC exports in particular - are very limited, we're still a major supplier to Asian countries. And the spike in global steel prices has quickly impacted China's," the analyst noted.

Moreover, rises in other commodities globally including crude oil, iron ore, steel scrap, coupled with surging freight costs, have been placing upward pressure on steel prices too, according to some Chinese market sources.

Written by Olivia Zhang, zhangwd@mysteel.com

Edited by Zhenqi Yang, yangzhenqi@mysteel.com