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Iron ore futures contracts on the Dalian Commodity Exchange (DCE) soared on Thursday, the first trading day after China’s five-day Labour Day holiday over May 1-5, amid the strong steel prices and ore demand. The most-traded iron ore futures contract for September delivery closed the daytime trading session at Yuan 1,184/dmt ($182.9/dmt), up Yuan 75.5/dmt or 6.8% from the settlement price on April 30, according to DCE data.
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The steady decline in stocks of processed and unprocessed steel scrap held by China’s 293 licensed steel scrapyards witnessed over the past three months has come to an end, with the total reversing up by 9.4% on month as of April 29, according to Mysteel’s latest survey. Chiefly responsible for the recovery were an increase in processing activity and the scrapyards’ decision to hold off selling in response to strengthening scrap prices, sources said.
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The inventories of finished steel products held by dealers across China reversed up over the April 30-May 6 period after declining for the prior eight weeks straight. But market sources said the uptick was just a symptom of the slowdown in sales during the Labour Day holiday over May 1-5 and that market sentiment stayed firm.
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Daily crude steel output among the 318 Chinese steel mills under Mysteel’s regular survey grew further to average 2.99 million tonnes/day over April 21-30, hitting the highest since mid-September 2020, as domestic steel mills ramped up production while steel prices remained profitable and end-user demand stayed steady.
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After pressing steelmakers under its jurisdiction to modernize their facilities to ensure they meet ultra-low emission standards within last year, North China’s Shanxi province, the country’s core coking base, has now announced a similar timeframe for the province’s coke producers to control their emissions as well. According to a recent notification by Shanxi’s environment and industrial authorities, all coking enterprises in the province have until October 2023 to ensure that their plants meet the ultra-low emission standards.
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The Purchasing Managers’ Index for the steel industry in North China’s Hebei province, the country’s top steel production base, climbed again in April to reach 53.6, growing by another 1.2 basis points on month thanks to firm end-user demand, according to the latest release by the Hebei Metallurgical Industry Association on May 1.
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Chinese steel scrap prices showed signs of strengthening during the Labour Day holiday over May 1-5, with the transaction price of 6-8mm common grade carbon steel scrap in Zhangjiagang city in East China’s Jiangsu province, China’s core scrap consumption base, increasing by Yuan 70/tonne ($10.8/t) from April 30 to Yuan 3,150/t on delivery and including the 13% VAT as of May 6.
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Global automobile production by Japan’s eight major automakers during the fiscal 2020 (April 2020-March 2021) fell to a nine-year low, or recording a 12.2% on-year decline to about 23.12 million units, according to the latest data released by the automakers, though the on-year decline was not as steep as the market had expected.
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China’s heavy trucks sales may have slowed in April, with the sales volume expected to grow 4% on year but down 14% on month, as demand may take a pause after a robust March even though the National Stage VI specifications will be adopted starting H2, according to the projection by the Beijing-headquartered Commercial Vehicle World (CVWorld) on May 5.
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Mysteel’s assessment on the Q235 150mm square billet price in Tangshan, North China’s Hebei province, jumped Yuan 70/tonne ($11/t) from April 30, reaching Yuan 5,060/t EXW and including the 13% VAT as of May 5, despite the Labour Day holiday over May 1-5, as domestic demand from the local re-rollers has strongly recovered on their restarting the rolling lines, market sources indicated.
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Very rarely, China’s National Development and Reform Commission (NDRC) released a statement both in Chinese and English on May 6, the first working day after the Labour Day holiday over May 1-5, notifying the public of the decision “to indefinitely suspend all activities under the framework of the China-Australia Strategic Economic Dialogue”.
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On April 30, China’s national HRB 400E 20mm rebar price surfed to a new 9.5-year high after an on-day gain of Yuan 15/tonne ($2.3/t) to Yuan 5,255/t including the 13% VAT, while spot sales of construction steel reversed down by 30% on day, according to Mysteel’s market surveys.
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Note:
1. Starting January 32020, Mysteel has enlarged the number of the warehousesin Wuxi by fiveto track 90% of the spot stainless stocks in the city, up from the original 80%. The formal release of the new data has commenced on June 1.
2.Starting October 15 2020, Mysteel has enlarged the
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China’s domestic steel prices are likely to see another round of inclines, mainly underpinned by the fundamentals and better-than-expected macro-economic environment, though market cautiousness may trigger possible modest downward corrections, Wang Jianhua, Mysteel’s chief analyst, shared in his monthly market outlook.
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Barely had the ink dried on recently-signed sales-purchase contracts for coke than leading merchant coke producers in North, Central and East China on Friday notified their customers that steelmakers will be paying another Yuan 100/tonne ($15.5/t) at least when next they purchase merchant coke – possibly as soon as from May 1.
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China’s prices for imported iron ore in port stocks and seaborne cargoes dived on April 30, with trading activities cooling throughout today as well.
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China’s tax revisions on steel imports and exports including cancelling export tax rebates on some products starting May 1 are strategic moves by the government after reviewing the market situation, and these are also part of the authority’s policies to curtail iron ore prices from soaring, control steel capacity and reduce steel output, the China Iron & Steel Association (CISA) stated in a post on April 29.
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Steel futures prices in China continued to strengthen during April 26-30 amid stable demand and market optimism, Shanghai Futures Exchange (SHFE) data shows. But market watchers warn that both supportive factors and uncertainties will weigh on prices during the coming month.
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Japan’s Purchasing Managers’ Index (PMI) for its manufacturing industry for April rose by another 0.9 basis points on month to 53.6, indicating that Japanese manufacturers expect a stronger degree of positive sentiment regarding the year-ahead outlook for output, according to data from index compiler au Jibun Bank Corporation, released on April 30.
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Japan’s carbon steel exports during fiscal 2020 (April 2020-March 2021) declined by 12.8% on year to some 20.26 million tonnes, according to the latest data released by the Japan Iron & Steel Federation on April 30, a fall the JISF attributed to the global coronavirus outbreak.
