Chinese Steel Market Analysis for Week Ending December 18th

In the past week, China steel still stood at high level, the reason is that China main steel mills still kept increasing EXW prices + production restriction.

With the coming of Chinese Spring Festival, traders need to buy some stock and this give market a big support. Also under the pressure of high cost, steel mills have no choice but to increase prices in order to get profit.

Heibei Group and Baosteel all released their EXW prices heavily on the same day, details as follows:

China issued its first air pollution red alert of the year, with the most severe smog since autumn set to start on Friday night and last for five days. Another 22 northern cities have been advised to follow the capital and issue the highest emergency response. The red alert, effective from 8 pm Friday, will see tougher restrictions introduced for private car owners, who will be allowed to drive only on alternate days depending on their license plate number.

For steel mills, Government orders all the sintering machines and 50% steel mills to stop production.

Compare to last week, supply of steel will be reduced, spot price hence will be still firm in this week, but we noted that price of 2nd grade Coke in Tangshan had a slight drop by RMB50/MT, which stood at USD2080. Also Iron ore had a continuous slight drop after reached its highest level of this year on Dec 12.

Below price details of Platts 62% index and spot Billets for your information:

Please note market changes fast, just got news Heibei Group increased EXW prices heavily again for 2nd ten days of Dec. HRC/CRC up RMB600/MT, GI/PPGI up RMB500/MT, I trust Shagang will follow soon, will update details in next weekly report.