International Steel Prices
Chinese HRC Prices Starting to Fall
Written by John Packard
January 5, 2017
Earlier this week we reported on the status of the Chinese steel markets and steel export price offers as of the end of this past week. Both trading company sources used by SMU reported that prices were artificially high and the expectation was that they would fall if not soon by no later than the end of the Spring Festival in China.
Late yesterday (which was early this morning in China) we received a note from one of the trading companies advising SMU that the tide has begun to turn: “So, here we go as per my last email on Chinese pricing… Benxi Iron and Steel dropped prices on 2.0mm HRC and up yesterday in RRQ quality from 525/mt fob st lsd to 500/mt fob st lsd (25/mt) decrease. Rizhou Iron and Steel dropped the price from 500/mt fob st lsd to 485/mt fob st lsd (15/mt) drop for same gauge and grade.”
Since the domestic mills (USA) are involved in scrap negotiations at this time we wanted to know if billet prices were also being affected and we were told that at the moment billet prices at $400-$405 FOB ST LSD were too high for Turkish buyers and should not have a negative influence on U.S. scrap prices right now.
We also noticed this morning a note from one of the financial analysts who reported that metallurgical coal prices, which had reached $312 per metric ton during November of last year, dropped to $208 per metric ton (FOB Australia). Iron ore has also come off its high of $82.8/dmt on 62% Fe fines on December 12, 2016 per dry metric ton and were reported this morning by The Steel Index to be $78.3/dmt.
World steel prices have been one of the supporting factors behind the strength of the U.S. market. Higher foreign prices provides markets outside of the U.S. for other countries to send their exports, thereby supporting U.S. prices (while still having the U.S. as an option due to AD/CVD restrictions). We will continue to watch developments closely to see if steel offers in the coming months are affected by changes in Chinese pricing should all the Chinese mills follow the lead of the two mills mentioned earlier in this article.
John Packard
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