Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Chinese billet and hot-rolled coil (HRC) prices in the domestic market have strengthened after the Golden Week holidays even as winter restrictions on output in Tangshan have been imposed since October 1. However, inventories of HRC remained high and a few participants are in a wait-and-watch mode. 


Finished steel prices could maintain uptrend in the short term but long-term stability looks bleak and steel prices could come under pressure. Domestic sales were slow while inventories started depleting from 300,000mt approaching 250,000mt on Tuesday for rebars. 


Iron ore prices inch down 

Chinese iron ore prices weakened on Monday amid slow trades after the implementation of autumn-winter output cuts in Tangshan city. This year, production restrictions were imposed two weeks before the usual dates and coincided with the Golden Week Holidays until Oct 8. Production resumed on Oct 12, however, in the period iron ore prices lost their steam.


Australian iron ore fines 62pc Fe content fell by $1.5/mt to $124.23/mt cfr Qingdao China on Monday after import bookings resumed. Iron ore futures on the DCE have dropped CNY5/mt ($0.7/mt) since Friday. 


In comparison to the prior year, restrictions’ impact would be limited and could be 3.6mn mt lower than that of autumn-winter 2019-2020 due to softer restrictions, reported Davis Index earlier.


The government has divided steelmakers into three categories, A, B and C depending on the quantum of restrictions to be imposed. All producers except for those coming under A category were ordered to cut sintering, pelletizing and BF operations by 10-45pc, down from 20-50pc last year. 


Bank of America revised its iron ore price forecast for Q4 2020, up by 10pc to $110/mt cfr China, while that for 2021 was increased by $5/mt to $90/mt cfr China with stronger Chinese demand forecasts.


It is expected that iron ore consumption would be higher than last year. Chinese billet prices strengthened to CNY3,410-3,420/mt ex Tangshan as supply still remains tight. 




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