Steel & Coal prices fairly unchanged last week

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19 December 2016

Chinese mills have taken a lead by hiking their offer levels for January deliveries. Many mills in the central and northern provinces have announced hike in the range of $25-50 per tonne for January, mainly in the flat steels section. Traders are unsure of finding buyers at the hiked levels but due to rising raw material prices, there is no softening from the mills end.

Domestic iron ore in China has moved up by $2-4 per tonne in the last week due to its cheaper price compared to imports. Mills have altered the blending ratios by using more domestic ore. Port inventories are over 106 million tonnes in China but the price is not seen to come down for imports.

Till late February or early March, the price of iron ore is likely to stay firm in the range of $70-85 per tonne CFR China.

Taking the iron ore price into consideration and slightly uptick demand from the east Asian consumers, mills like Shougang Group and Benxi have released a fresh increased list of their offers.

Japanese mills have also announced a price hike for January in the range of $40-60 per tonne, mainly for flats and special steel products, due to their contracted coking coal prices which are now up by $80 per tonne as compared to last quarter.

Globally, China is sort to be the initiator which is followed by others like Turkey, Indonesia, Japan and Korea. India, US and EU will also follow but due to their slow domestic demand and relatively smaller export market may not be able to hike their prices in the same range.

Indian steel producers in the last 2 (two) months have tried to hike their prices in the range of Rs 1000-3000 per tonne (cumulative) but their customers have not agreed even to Rs 100 per tonne hike, as per sources. There is very little respite for the steel mills in India as demand is shy and production is gearing up to match government’s 300 million tons target.

Price listing of Chinese steel indicates HRC this week closing at $ 523 per tonne and rebar at $455 per tonne. No change in the price through the week. Billets in the domestic market were $450 per tonne again with no change.

Raw material prices showed iron ore closing the week at $80.80 per tonne, down by a dollar on week closing. Coking coal closed at $252 per tonne, down $2 per tonne through the week and thermal coal $83.35 FOB S. Africa for RB1 (6000 NAR) $3.5 per tonne up at week closing.