Steel markets are undergoing changes as China adjusts to its raw material demand and takes steps to cut output while global steelmakers face higher production costs.
China's iron ore imports fell for a second straight month in October due to reduced volumes from Brazil and India. China customs data showed imports fell 4.05 million tonnes, or 4.19%, to 91.61 million tonnes. Iron ore imports from Brazil fell 2.97 million tons, or 12.81%, month-on-month, to 20.22 million tons.
With steel production cuts and energy restrictions in China limiting blast furnace operations, demand uncertainty is high, leaving little interest in buying. Demand for high-grade iron ore increased, as steel mills sought cost-effective ways to keep blast furnaces running.
As winter approaches, steel production curbs, sintering restrictions and weaker construction demand could weigh on China's iron ore prices, further weighing on Asian iron ore prices.
Along with falling iron ore imports, China's recycled steel imports fell for the third consecutive month in October to 11,878 tonnes, down 51.8% from September, according to Chinese customs data. Volumes from Japan accounted for the bulk of the month's imports with 6,156 tonnes, the lowest since February, followed by South Korea with 2,413 tonnes, up slightly from September's 2,170 tonnes and Malaysia at 882 tonnes, up from 790 tons a month ago.
According to sources, blast furnace utilization rates in the Hebei cities of Tangshan and Handan, two major steel production hubs in China, were below 65% and 70% respectively, as of mid-May. 11. Meanwhile, concerns about oversupply have emerged amid expectations of lower end-user demand in Q1 2022.
Market sources say while property construction activity is likely to deteriorate in Q1 2022 due to poor home sales and land purchases in 2021, on the contrary, steel production could pick up .
Downstream, China's semi-finished steel imports in October reached 1.362 million tons, down 6.7% month-on-month, after recording a 30% month-on-month increase in September and an increase in July. 4% in August, according to Chinese customs data released on November 22, October imports fell 16% year-on-year.
China's nationwide steel production cuts in September boosted domestic steel prices, which stimulated overseas billet orders for November-December deliveries. may lead to a rebound in imports in November, December due to good orders.
However, as the end of 2021 approaches, buyers have shifted focus to contract discussions while some sources in China say neither traders nor end users are interested in stockpiling. , as the steel market may continue to trend downward amid oversupply in Q1 2022.
Coils: US market wobbles, Europe stabilizes
In the US, the hot rolled coil market continued to decline sharply in mid-November due to limited order activity. However, there is still potential for improvement as delivery moves into January.
In Europe, the HRC market started inching up in mid-November on strong bullish sentiment for the first quarter of 2022, with offers for next year already in place.
The Asian HRC market weakened further in mid-November as China futures fell after a brief rally, keeping buyers on hold amid an uncertain market outlook.
Platts rates the 3mm thick HRC SS400 at $768/ton FOB China on Nov. 18, down $1/ton from the previous day. On a CFR Southeast Asia basis, coil of the same grade was valued at $778/ton, down $2/ton from the previous day.
The spot price of HRC Q235 5.5 mm in Shanghai was 4,650 yuan/ton ($728/ton) ex-factory, including value-added tax, down 50 yuan/ton from the previous day and the lowest since the 10th. February.
Long steel products
The International Association of Rebar Producers and Exporters (Irepas) said on November 8 in its latest short-term outlook, a new agreement between the US and the EU could open the door to increased rebar sales. rebar and coils sourced from the EU enter the US market, which will likely support factories in the EU, which are subject to high energy prices. The association refers to an agreement reached on October 30 to replace the previous Section 232 duties on steel and aluminum with a tariff quota on imports of the metal from the EU.
Irepas noted that EU long-product factories do not have much interest in exporting to the US market, at least for the time being, because the quotas granted to EU businesses will not be large and the parameters Technical specifications required by the US market are not suitable for EU businesses.
The sky-high freight costs constitute another negative factor. Likewise, in Asia, rebar prices stabilized on Nov 18 due to market slowdown.
The most actively traded January 2022 rebar contract on the Shanghai Futures Exchange closed at 4,169 yuan/ton ($653/mt) on November 18, down 47 yuan/mt from today. before. Beijing spot prices for 18-25 mm diameter HRB400 rebar are assessed at RMB 4,600/ton ($721/ton) ex-factory actual weight, including 13% VAT, unchanged from session. before.
Most buyers in Hong Kong and Singapore are waiting for clear market trends before making purchases for February 2022 delivery. Platts rates 16-20 mm diameter BS500 rebar at $738/ FOB China tons actual weight on November 18 was unchanged from the previous day, and the 16-32 mm diameter rebar BS4449 grade 500 was at $732/ton CFR Southeast Asia.
Steel plate: Market stabilizes at higher levels amid lackluster shipbuilding forecast
US plate market held steady through mid-November. Platts rating of US plate was unchanged from last week, at $1,880/ton in Midwest on Nov. 19, but market sources share The majors continue to expect prices to rise further as the two major producers open January orders.
In Europe, the steel plate market showed signs of recovery on November 19, amid sustained bullish sentiment from the market.
Regarding steel plate demand from the shipbuilding industry, a report from the Export-Import Bank of Korea noted that the strong growth in container ship and LPG tanker orders in 2021 is unlikely to continue. in 2022, the number of new orders is forecast to decrease by 15.3% in 2022.
Scrap steel and Raw materials: US market is stable, other markets are mostly weak
Turkish sea import scrap prices fell slightly in the week ending November 19, as Turkish mills sought to buy goods at lower prices amid weak finished steel demand.
Platts rates Turkey's imports of high-grade smelting scrap ½ 80:20 Nov 19 at $495/ton CFR, down $5/ton from last week.
US recyclers mostly try to resist selling below $500/ton CFR for HMS ½ 80:20, but Baltic recyclers are more likely to accept $495/ton CFR.
A weaker euro against the US dollar could add further downward pressure on Turkish CFR prices in dollar terms, although scarce scrap into exporters' warehouses could limit the downside. in short term.
The US Midwest scrap market outlook remains solid ahead of December trading as demand is expected to remain strong. The US Midwest scrap price was assessed on Nov. 19 at $530/ton shipment. This price was unchanged from last week but increased by $65/ton from last month.
China's heavy recycled steel prices continued to decline in the week to November 19, as buyers in the region cut their bids with the Chinese steel market outlook unclear.
In the region, a Korean factory secured 2,000 tons of Japanese HS at 64,000 yen/ton ($559/ton) CFR Korea, which, if normalized with the shipping difference, would equate to $574/ton CFR China.
