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

China’s Baosteel increased its domestic finished flat steel products prices for the third successive month. The prices for August shipments increased by CNY100/mt ($14/mt) on ex-plant basis from July prices amid bullish domestic steel demand. Chinese iron ore import prices hit a new high this week, while downstream steel demand experienced a strong recovery.


Baosteel raised HR, CR and plate product prices by CNY100/mt from the prior month amid higher input cost. Iron ore import prices have trended up in China since June. For September shipments, HRC exporters are targeting a level of $485/mt cfr China, up $20/mt from July. 


Flat steel demand recovery

The steelmaker is optimistic of a recovery in flat steel demand in H1 2020. The impact of COVID-19 has withered in China. Several economic stimuli including additional subsidies on purchase of eco-friendly and electric vehicles could increase auto sales and fuel demand for automotive steel plate in the domestic market.


Iron ore prices near year’s high 

Profit margins are expected to remain squeezed, despite a hike in flat steel prices, due to higher input costs. On July 14, imported iron ore prices in China from Australia increased to $110-111/mt cfr China levels, which is an 11-month high. Ore prices are expected to stay bullish as the spread of COVID-19 has disrupted supplies from Brazil and seasonal concerns in Australia is expected to further reduce the overall production volumes in Q3 2020. 

High utilisation rates 

China’s blast furnace utilization rate has increased by 5.1pc in the first half of 2020 to 70.4pc from the prior year. The daily average crude steel production at major steelmakers reached 2.14mn mt, up 5.7pc from the prior year in late-June.



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