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China has raised the flooding alert to orange from yellow since July 12 with historically high water levels at many rivers and lakes, but so far steel mills in the affected provinces in East, Central and Southwest China have been operating as per normal, and have taken extra preventive measures, market sources shared on Monday.
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The continuous four-month rally in daily crude steel production among the 318 Chinese steel mills Mysteel monitors came to a gradual end earlier this month, with the tonnage retreating by 18,800 tonnes/day or 0.6% from late-June’s record high to average 2.93 million t/d over July 1-10, as more steelmakers commenced maintenance during the traditional off season for steel consumption.
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Shagang Group, China’s largest long steel producer, announced on July 11 to roll over its long steel list prices for sales over July 11-20, or the third time of no change in a row for its ten-day sales, despite the moderate price recovery in the domestic spot market recently.
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Nippon Steel Stainless Steel Corp (NSSC), Japan’s largest stainless producer, has kept its July domestic prices of 300- and 400-series products unchanged for distributors, which has delivered little relief to the distributors, as they have been struggling to transfer the previous price hikes by producers to the end-users yet amid the sluggish domestic demand.
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Note: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 have commenced on June 1.
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Over July 6-10, China’s rebar and HRC prices recovered on the declines in steel production, the slowdown in steel stocks build-up, as well as the growing market optimism in the next few months that had boosted spot sales.
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China’s sales of excavators for domestic customers and exports totalled 24,625 units in June, still higher by 62.9% on year, though sales have been recording a steady on-month decline for four consecutive months, according to the latest release of the China Construction Machinery Association (CCMA) on July 9.
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Tata Steel reported a 37% q-o-q drop and a 34% y-o-y drop in output at its Indian operations to 2.99mn t in Q1 FY’21.
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Stainless steel inventories at commercial warehouses in Wuxi and Foshan, China’s two stainless trading hubs, remained stable over July 3-9 with new arrivals from steel mills replenishing stocks depleted by the continued consumption of stainless users. The tonnage stayed at 488,683 tonnes, almost unchanged from one week previously, according to Mysteel’s latest weekly survey.
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Domestic auto production and sales saw on-year rises for the third successive month in June after declining for 21 straight months, with the recent recovery of the auto industry’s performance seen as helping more to prop up demand for hot-rolled coil (HRC) than cold-rolled coil (CRC), Mysteel Global has learned.
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Despite the COVID-19 wreaking havoc across much of China during the first half of 2020, steel enterprises had been steadily progressing with the 38 ongoing new steel projects including installing new steelmaking and rolling facilities, adding on environmental protection facilities and upgrading assorted technology, according to a Mysteel report checking on the status of ongoing projects by the end of H1.
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China’s price of HRB400 20mm dia rebar increased for a fifth successive working day on Thursday, rising by another Yuan 22/tonne ($3.1/t) on day to Yuan 3,806/t including the 13% VAT, mainly thanks to the decline in production and a slowdown in stocks accumulation, Mysteel Global noted.
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The stocks of the key finished steel items held by traders across China continued increasing over July 3-9 given the dampening effect of the intense rains on sales. However, the pace of growth in inventories slowed over the period due to the decline in production and the moderate improvement in market sentiment which stimulated a rise in trading, Mysteel Global noted.
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On July 8, prices of all the ferrous futures including rebar, hot-rolled coil (HRC), and iron ore all surged substantially in China on the growing market optimism for the second half of 2020 and more capital flow into the stocks and commodities markets, market sources shared, noting that the related spot prices had been boosted too.
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Japan’s crude steel demand for the July-September quarter is expected to plunge by 27.9% year on year and down 3.2% on quarter to 17.7 million tonnes, according to the forecast released by Japan’s Ministry of Economy, Trade and Industry (METI) on July 8, indicating the domestic steel mills will have to maintain low production.
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Tensions between China and India amid a military standoff at the disputed northern borders could potentially hurt commodities trade and encourage diversion to illegal channels, Biman Mukherji and Ritwik Sinha report.
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China’s fixed asset investment on railways and rail infrastructure reached Yuan 325.8 billion ($46.4 billion) over January-June, up Yuan 38 billion or 1.2% on year. Within the total, the investment in railway infrastructure alone reached Yuan 245.1 billion, recording an on-year increase of 3.7%, according to a post on the website of the China State Railway Group (China Railway) on July 5.
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China’s steel export prices remained stable over June 29-July 3 after increasing $5-10/tonne during the prior week, according to Mysteel’s latest weekly report, which pointed out that demand from Asia showed signs of recovery with the faster resumption of industry in India after New Delhi’s COVID-19 shutdown and the restart of construction activities in Singapore.
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China’s 91 blast-furnace mills under Mysteel’s monthly survey have reported that the gross profits they earned on the three major steel products all shrank last month, with their average margin on rebar plunging the deepest, tumbling by Yuan 163/tonne ($23.3/t) on month to just Yuan 92/t for June. Survey respondents chiefly blamed higher production costs for procuring raw materials against lower rebar prices amid sliding wet-season steel demand.
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Torrential rains that have pummelled Japan’s southern island of Kyushu since the weekend are moving up the spine of Japan’s main island of Kyushu, causing great destruction and severely disrupting logistics, though so far, no damage to steel producers has been reported, steel industry insiders are nervously waiting out the rains, fearing the unfolding disaster will deliver a further savage blow to market sentiment, already weakened by COVID-19.
