International Steel Mills

China Weekly Update: Steel, Iron Ore, Coking Coal

November 1, 2016

After already publishing the article below on our website for our members, we received a note from our primary Chinese price source advising us that prices rose in China today by approximately $61 per metric ton. We were told, “Price on 2.5mm [.0985″] is USD450/mt fob st. lsd. A lot of buyers did not cover their purchases with 1st Tier Integrated mills John and believe me those purchases will be cancelled.”

Here is our original article:

As long as we are able to gather new information out of our sources in China we intend to publish a weekly China outlook article. The first report is from a long-standing Asian source that goes back to SMU publisher John Packard’s steel trading days. We learned on Monday evening:

From my side, BHP December 62% Ore booked yesterday at USD64.58/mt CNF FO. Australian Coking Coal very stable at USD240/mt fob st and note a large number of countries import from Australia, excluding China as they have enough domestic supply. So, calculate John, 64.58 + 64.58 + 245 (2 Fe Ore x 1 Coking Coal) for 1/mt liquid steel and that is just the basics, and price is 374.16/mt for Integrated Steel Mills today.

Billet prices are USD360/mt fob st lsd today and this gives you some idea of how product prices are behind the production costs.

A second source located in China reported to Steel Market Update the following:

In our last report, we mentioned that all China main steel mills increased their EXW prices so China domestic market was still very firm in last week.

Another main reason is that prices of raw materials gave spot prices a big support, steel mill’s margin is less and less. Platts 62% index stood at USD63.1/MT last Friday and this is the fourth time that Platts 62% index stand above USD60MT, the highest price in this year is USD70.5/MT on April 21 and lowest price is USD39.25/MT on Jan 14. Ⅱ grade Coke price stood at RMB1570/MT which is the highest price of this year and lowest price is RMB690/MT at the beginning of this year.

Also coal demand exceeds supply also gives big pressure to steel mills.

oday is the last day of Oct, Shagang/Heibei will release new EXW price for the first ten days of Nov tonight or tomorrow noon latest, I guess they will further increase prices and other mills will follow up so spot price will be also firm in this week.

For spot prices, Billets up RMB30/MT in weekend and stood @ RMB2300/mt last day!

Below offered prices today only for your reference…

HRC 5.5mm*1500mm*C in Q235B grade @ USD428/MT FOB

CRC 1.0mm*1250mm*C in SPCC grade @ USD490/MT FOB

Billets 150mm*150mm in 3SP/Q235 grade @ USD350/MT FOB

Wire Rod 6.5/8/10mm in SAE1008Cr grade@ USD380/MT FOB

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