International Steel Mills

Chinese Steel Market Analysis for Week Ending November 13th

November 15, 2016

The following analysis of the steel markets in China is from Beijing Metal Import & Export Co.,Ltd and is being reproduced by Steel Market Update with permission:

Today is Monday, Please allow us to update China steel market (Nov 07 – Nov 13, 2016) as usual as following:

In past week, market and non-market factors pushed China steel market to increase heavily.

First market factor is that the prices of raw materials reached the highest level in this year. Platts 62% index already stood @USD80.4/mt on last Friday and Ⅱgrade Coke price in Tangshan already stood at RMB1980/MT

Second market factor is that China main steel mills further increased their EXW prices. Under the pressure of the increasing costs of raw materials, China steel mills has to further increase their EXW prices in order to make a profit. According to our calculation, steel mills will make loss if not increase EXW prices according to the spot prices of Iron ore and Coke.

Details of EXW prices as following:

Shagang – prices for the 2nd ten-days of Nov, 2016

WR HPB300 Ф6.5mm @RMB3180/MT, up RMB400/MT
Debar in coil HRB400 Ф8-10mm @RMB3220/MT, up RMB400/MT
Debar in bundle HRB400 Ф16-25mm @RMB3200/MT, up RM500/MT

Wisco –

HRC 3.0*1250 SPHC @ RMB3810/MT, up RMB400/MT
CRC 1.0*1250 Q195 @ RMB4720/MT, up RMB350/MT
HDG 1.0*1250 DX51D @ RMB6760/MT, up RMB350/MT

Also Baosteel –

HRC up RMB351/MT
CRC up RMB304/MT
HDG up RMB234/MT

Hebei Goup –

WR up RMB400/MT
Debar up RMB440/MT

Third market factor is that Futures market also increased sharply last week. Futures market prices forced spot prices to keep going up. Government had to increase the trading fees and the rate of deposit to prevent the excessive rise.

Non-market factor is that Tangshan government still released the policy to limit steel production on Nov 11 due to the bad weather, including all the Blast Furnace and coke factories stopped to produce, forbid big truck on the road etc.

Spot price of Billets stood @ RMB2520/MT yesterday.

For export [out of China]:

Billets 150mm*150mm*6m in 3SP grade@ USD370/MT FOB
HRC 5.5mm*1500mm*C in Q235B grade @ USD470/MT FOB
CRC 1.0mm*1250mm*C in SPCC grade @ USD550/MT FOB
Wire Rod 6.5/8/10mm in SAE1008Cr grade@ USD420/MT FOB

Exchange rate is 6.86 RMB to one U.S. dollar.