CRU: Strong Demand for Raw Materials Amid High Production in China

Meanwhile, the iron ore supply from Australia remains strong with Port Hedland shipments reported at 12 Mt last week. According to market sources, iron ore buying from China continues to be active because iron ore inventory is at a relatively low level at around 24 days of operation. Steel mills are enjoying good profit margins and therefore would want to keep production high in the coming weeks. CRU has assessed the weekly 62% Fe fines price at $102.8 /t, which is a $3.8 /t increase w/w.

Import Restriction Puts Coking Coal Prices Under Pressure

Coking coal prices were relatively stable last week on decent buying from China. Given the strong steel production, Chinese steel mills were actively buying coke. Merchant coke makers are in negotiation for another RMB 50/t increase for coke with steel mills. However, the seaborne coking coal price was not able to fully benefit from this strong demand in China due to import restriction. According to a market source, port clearance of coking coal cargoes is getting stricter and the remaining quota for imported coal is limited.

Meanwhile, coking coal demand from India was absent on the spot market. Coking coal import into India was heard at 3.6 Mt in May, i.e. a decrease of 16 percent from the previous month. On the supply side, coking coal shipment from Hay Point port was flat w/w at 2.6 Mt. CRU assessed the weekly average price for Premium HCC, FOB Australia, at $109/t, down by $3.8 /t w/w, while Standard HCC, FOB Australia, was assessed at $87.5 /t, down by $3.0 w/w.

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