(HSV VIETNAM GROUP) – China's steel output and steel inventories in 2023 are similar to the previous year's levels, but overall market sentiment is weak, as demand recovery this spring is expected to remain slow amid a troubled real estate industry and local governments entering deleveraging mode. It is expected that new home construction starts, a major driver of steel demand in China, will continue to decline significantly in 2024 due to poor home sales.
After the Lunar New Year holiday ended on February 17 in China, the domestic steel market remained quiet, making market investors concerned about the recovery of steel demand.
Market sources said steel output and steel inventories were similar to year-ago levels, but overall market sentiment was weak, as demand recovery this spring is expected to remain slow amid a troubled real estate industry and local authorities entering deleveraging mode.
It is expected that new home construction starts, a major driver of steel demand in China, will continue to decline significantly in 2024 due to poor home sales.
China's crude steel output in 2023 was unchanged from 2022 at 1.019 billion tons while steel exports were at their highest level since 2016.
China's major crude steel consuming sectors
"Over the next two years, we expect global steel production to improve further with growth led by India, Southeast Asia and to a lesser extent China," according to BHP - the Australian mining company.
HRC
In the US, the hot rolled steel market is quiet as spot purchasing power continues to decline and service centers are waiting for prices to drop further before restocking.
US HRC prices were at $900/ton ex-works on February 16, unchanged from the previous assessment.
In Europe, HRC buyers do not want to order large quantities and wait for prices to decrease. Northwest European HRC prices were at €725/tonne ($782) ex-Ruhr on February 16, down €5/tonne from the previous session.
Market participants expect prices to soon fall to €700/ton ex-works in Europe.
In Asia, the HRC market was quiet as most market participants in China were on holiday for the Lunar New Year, which ended on February 17.
Prices for HRC SS400 3mm thick were at $553/ton FOB China and $555/ton CFR Southeast Asia on February 16, unchanged from the previous week.
According to a Korean trader, demand in Southeast Asia remains weak with wide trade gaps, causing some factories to focus on exporting to Europe and the US.
Long steel products
In Türkiye, the rebar export market lacks significant activity while scrap import prices into Türkiye remain stable.
Türkiye's export rebar price was at 610 USD/ton FOB on February 9, unchanged from the previous session.
US Southeast steel bar prices were at $845-$865/ton ex-works on February 16, down from $865-$875/ton the previous week, while US Midwest steel prices were at $840-$850/ton ex-works, down from $855-$865/ton last week.
In Asia, the seaborne rebar market is stable due to limited downstream demand and ample inventory levels.
Grade 500 BS4449 steel bar price 16-32 mm at 568 USD/tonne CFR Southeast Asia, and China's 16-40 mm diameter BS500B grade rebar exported from China at 566 USD/tonne FOB, February 16.
The tradable level is said to be in the range of $565-$570/tonne CFR Singapore, while some market participants are said to be keeping a watchful eye on China's spot and futures markets to back track any increase in activity and price volatility.
Steel plate
The US steel plate market weakened further amid reports from market sources of lackluster order activity.
US steel plate was at $1,320/ton on February 14, down $40 from the previous assessment.
Similarly, in Europe, the steel plate market weakened due to limited purchasing activity.
In Southern Europe, domestic heavy steel plate prices decreased by 20 €/tonne compared to last week at 750 €/tonne ex-works Italy on 16 February.
Sources said poor demand was the main reason for the price drop.
In Asia, the steel plate market was stable in the first half of February due to China's Lunar New Year holiday.
Platts assessed 12-20mm SS400 steel plate at $573/mt FOB China on February 14, unchanged on the week. Platts values the same material 12-25 mm thick at $586/tonne CFR Korea, also unchanged over the same period.
A source said that sea market activity in other regions also slowed down due to China's absence and the Lunar New Year holiday.
Scrap steel
India's containerized scrap metal import market stabilized in early February amid little buying demand.
The price of imported containerized scrap was at 413 USD/ton CFR Nhava Sheva on February 9, unchanged from the previous week.
In Türkiye, the seaborne scrap import market weakened due to decreasing buyer sentiment.
Türkiye's 1/2 (80:20) premium heavy molten scrap import price was at $412.50/tonne CFR on February 20, down 75 cents/tonne from the previous session.
In Asia, Japan's FOB H2 export scrap price increased slightly in the context of the end of the Lunar New Year holiday and increased Tokyo steel prices.
H2 scrap price was at 52,000 Yen/ton ($345/ton) FOB Tokyo Bay on February 14, up 200 Yen/ton from last week.
Australian metallurgical coal is stable
Asian high-grade metallurgical coal FOB market stabilizes amid weak end-user demand in India.
Premium coking coal prices were unchanged from the previous session at $315/mt FOB Australia on February 16. CFR China prices remained at $320/mt.
The company cut its list bid price for “first grade” or domestic HMS 1/2 80:20 equivalent scrap to T$11,800/mt ($376/mt), down T$200/mt, excluding value added tax for deliveries to its Taichung mill, according to a mill source.
Demand from Indian end users has been lackluster even though inventory requirements have not been met, market sources said.
Asian iron ore market increases
Seaborne iron ore prices increased slightly in mid-February while the market awaited the return of participants from China after the Lunar New Year.
The 62% Fe iron ore index was at $130/dry ton CFR North China on February 16, up 50 cents/dry ton from the previous session.
There are many expectations that restocking activities after the Lunar New Year will take place in the coming days.
Ha Diem HSV