19-12-2022 Recent Changes in the Chinese Steel, Iron Ore, and Coal Markets, Commodore Research & Consultancy
Brief update on movements in the Chinese steel, iron ore, and coal markets. The average price of hot rolled coil ended last week at approximately 4,275 yuan/ton. This is up week-on-week by 115 yuan (3%). Weekly increases of 3% are not that common, but such an increase has now occurred for two straight weeks. Steel prices in China are now at their highest level since July. Also of note is that flat and construction steel stockpiles at warehouses in major cities in China ended last week at 9.3 million tons. This is up week-on-week by 100,000 tons (1%) but is down year-on-year by 1.3 million tons (-12%).
The latest data from the China Iron and Steel Association (CISA) shows daily crude steel output at large and medium-sized mills averaged 1.99 MMT during December 1 – December 10. This is 2% lower than was seen during the previous ten days but is up year-on-year by 3%. Overall, it is encouraging that output has stayed well above last year’s level. We also remain of our view that output very likely bottomed in late July.
136.2 MMT of iron ore is now stockpiled at Chinese ports. This is 200,000 tons less than was stockpiled a week ago and is down year-on-year by 21.3 million tons (-14%). Also of note is that global iron ore prices have remained firm. Spot benchmark Australian iron ore, for example, ended last week at approximately $104/ton FOB. This is unchanged from the previous week and is up year-on-year by $4 (4%).
The amount of coal stockpiled at major northern ports in China now stands at 22 MMT. This is unchanged from the previous week and is up year-on-year by 100,000 tons. Coal stockpiles at the major transshipment port of Qinhuangdao (which is included in major northern ports) ended last week at approximately 5.8 MMT. This is also unchanged from the previous week and is up year-on-year by 900,000 tons (18%).
Rates for routes used to ship coal along the Chinese coast came under renewed pressure last week. The cost to ship coal from Qinhuangdao to Shanghai, for example, has fallen to approximately $6.78/ton, which is $0.32 (-5%) less than a week ago. The cost to ship coal from Qinhuangdao to Guangzhou has fallen to approximately $4.37/ton, which is $0.32 (-7%) less than a week ago.