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Support from China’s macro-economic environment and steel-market fundamentals may lead Chinese steel prices to record further gains in August, albeit with some fluctuations, according to the latest monthly report compiled by Wang Jianhua, Mysteel’s chief analyst.
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Chinese prices of imported iron ore for both port inventories and seaborne cargoes fell sharply on July 30 amid bearish market sentiment. Trading was also thin.
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The most-traded iron ore futures contract on the Dalian Commodity Exchange (DCE) for September delivery plunged by a large 8.1% on Friday, triggered by the prevailing bearish sentiment in China’s iron ore market on the likelihood of slowing demand in coming months.
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China’s announcement on July 29 to cancel export tax rebates on 23 steel products as well as raising export taxes on high-purity pig iron and ferrochrome, all effective on August 1, though just three months after the last round of adjustment, appears inadequate to the market sources, and many of them are still closely watching whether more policies will be rolled out soon.
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Total coke production among the 230 independent Chinese coking plants in Mysteel’s weekly survey slid for the second week over July 22-28, easing by 11,600 tonnes/day on week to 593,500 t/d on average and hitting a four-week low. The decline in coke output during the survey period was mainly in response to tougher environmental controls and to output cuts which some plants in North China had undertaken because of low coal stocks.
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As steel demand slows for summer and Beijing ups the pressure for output cuts, China’s blast furnace steelmakers are consuming more mainstream imported iron ore fines such as Jimblebar Fines, Super Special Fines, Yandi Fines, FMG Blend Fines and Mac Fines whose Fe grades are below 61%, market sources noted on Friday. This is making prices of these ores appear more resilient than those of higher Fe grade products when ore prices overall are trending down.
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China’s nominal economic growth is very likely to slow down after the COVID-19 years, mainly because of the changes in China’s population structure and the deceleration in investment growth, Xu Xiaoqing, chief economist of DH Fund Management Co shred on July 28 at the 5th China Steel Derivatives International Conference 2021 (CSDIC) in Shanghai.
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This year, China will shift its focus on cutting down on its actual output, a major difference from the past few years when the core task is to eliminate excess and obsolete steel capacities, Wu Xianfeng , an official from the Ministry of Ecology and Environment (MEE), shared in Shanghai on July 29 at the China Iron and Steel Association (CISA)’s interim meeting with its members.
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The blast furnace utilization rate among China’s 247 steel mills nationwide under Mysteel’s regular survey dipped for the second week over July 23-29, down 1.21 percentage points on week to 86.83%, as more steel mills had trimmed production on the request of their local authorities as well as in response to the tepid steel demand in summer.
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Vehicle production among Japan’s eight major automakers over January-June rose 30% on year to about 12.2 million units from all their assembly plants in and out of Japan, Mysteel Global calculated based on each maker’s production data released on July 29, largely due to the low base a year ago, as it was still 13% lower than two years ago.
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Carbon neutrality will bring profound changes to the global steel industry in that it will reduce steel demand, restructure demand, raise production cost, and erect “green” barriers in steel trading, Jiang Li, chief analyst of China Iron & Steel Association (CISA), remarked when presenting on July 28 at the 5th China Steel Derivatives International Conference 2021 in Shanghai.
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On July 29, China’s rebar and billet prices had paused from the recent fluctuation, according to Mysteel’s assessments, as HRB400E 20mm dia rebar was the same on day at Yuan 5,452/tonne ($845/t), and Q235 square billet in North China’s Tangshan unchanged too at Yuan 5,240/t EXW, both including the VAT, while spot sales of construction steel inclined for the second day.
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India’s metallurgical (met) coke import prices have continued to remain mostly stable over the past week amidst acute tightness in global supply that has resulted from persistently high Chinese demand and record strong steel prices and margins in Europe.
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Citing high coking coal prices, some coking plants in North China’s Shanxi province, the country’s top coking base, on Thursday announced they were hiking their offer prices for merchant coke by Yuan 120/tonne ($18.5/t) effective from 0:00 Beijing time July 29, according to sources.
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Limited bids from end-users, falling global iron ore prices and steel output cuts in China continue to exert downward pressure on Indian pellet export prices. SteelMint’s pellet export index (Fe 64%, 3% Al, FoB east coast) has recorded a drop of around $21/t w-o-w and currently stands at $196/t. The index has fallen to a nearly three-month low, as per SteelMint data.
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Those Chinese steel mills whose facilities meet the government’s “ultra-low emission” standards are likely to enjoy more privileges in future as more policies will be launched to encourage domestic steel producers to reduce their emissions and achieve sustainable development, Wu Xianfeng, an official from the Ministry of Ecology and Environment (MEE) disclosed at the interim members’ meeting of China Iron and Steel Association (CISA) on July 29.
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China’s industrialization and technological upgrading will gradually drive more liquidity to HRC and stainless steel futures than the established rebar futures,
Feng Xiazong, senior manager, commodity dept 1 of SHFE, shared in Shanghai at the steel forum of the 5th China Steel Derivatives International Conference 2021 on July 28.
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The stocks of finished steel products held by Chinese trading houses monitored by Mysteel increased for the seventh week in a row over July 23-29, rising by 0.7% on week, according to the weekly stocks survey. The pace of accumulation was faster than the 0.1% uptick last week, because the hot and rainy summer weather has crimped steel demand, sources said.
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Starting August 1, China will remove export tax rebates on 23 steel products including carbon and alloy steel cold-rolled coils (CRCs), galvanized, galvalume, coated sheets, tinplate, electrical steel, steel rail, and seamless pipes for the oil and gas industry, according to the joint announcement by China's Ministry of Finance (MoF) and State Taxation Administration.
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Starting August 1, China will raise the export tax on high-purity pig iron to 20% from the exsiting 15%, and that on ferrochrome (FeCr) to 40% from 20%, according to the latest amnnouncement by the country's Minstry of Finance.
