Global steel prices showed a mixed trend in August 2023. While hot
rolled coils (HRCs), in particular, remained mainly range-bound, longs lost
ground, reveals data maintained with SteelMint.
In HRCs, China's offers rose just $4/t m-o-m to $566/tonne (t).
India's quotes upped a mere $2/t to 572/t. Russia's actually fell $9/t to
$566/t but Japan's rose a sharp $17/t to 592/t.
Turkiye's rebar offers slipped 3% in August to $572/t (against
$589/t in July) while Black Sea billets dropped 4.45% to $450/t ($471/t).
All prices are on FOB basis.
Factors that impacted global steel prices in
August
China sets price direction: Although
the market witnessed volatility, HRC prices remained stable, especially from
the largest exporter, China, as well as from India.
China was the
dominant player in the HRC export market and sold substantially in the Middle
East and North Africa and a moderate amount in Southeast Asia and Latin
America. With its own domestic demand subdued and the government yet to
officially announce any production cut measures, output was up 2.5% over
January-July. Hence, China kept offers range-bound to retain its hold on
overseas sales. That apart, domestic mills in Vietnam, a key Chinese market,
lowered HRC prices m-o-m by $15/t CIF mid-August, which further pressured
Chinese offers.
Where Japan was concerned, there were no firm offers
as domestically the country experienced demand. Major fabricators had a
considerable backlog of orders, and "prices are likely to remain resilient, mainly for large-scale
projects, from autumn onward," a source informed, adding,
inventories of both thin and thick steel plates decreased, and further
improvement in supply and demand is expected. Secondly, Japan's steel exports
rose 12% in July, marking the first increase in two months and the first
double-digit growth since December 2021. Japan's crude steel output is also
expected to increase almost 2% in the July-September quarter.
Indian offers
remained flat amid minimal buying interest while domestic demand was quite
decent. The Vietnamese and MENA markets had moved away to China while European
Union end-users remained closed for summer maintenance.
Russian HRC
offers fell mainly because of the eroding rouble, which recently plunged to a
16-month low against the dollar since the war erupted in February 2022.
Longs demand weak globally: The
story in longs was, however, bleak globally, pulling down items across the
board - billets, rebar, wire rods etc. There was a supply glut amid low demand.
A crop of new players is in the market - Algeria, Egypt, the UAE and Saudi
Arabia - with aggressively low quotes. In China, with the property market
struggling and no clear-cut announcements on production, the market was highly
uncertain, pulling down rebar futures for October delivery. Buyers moved to the
sidelines while construction did need-based purchasing.
A lot of billet and rebar sellers from Southeast Asia and
non-traditional sources like Algeria and Egypt have
been jostling for space, pressuring down prices.
Turkiye, a key longs
seller, has been badly hit by sanctions on Russia. It buys semis from the Black
Sea region, makes rebars to sell to the EU and the US. However, fresh western
sanctions demand that no input material can be sourced from Russia, putting
Turkiye in a bind.
Russian longs
producers, on their part, even if they do not have global takers, are busy
servicing their domestic market as the country sees a construction upsurge.
Against such a global backdrop, Japan's top EAF steelmaker, Tokyo
Steel, rolled over its HRC and rebar prices for September sales.
Raw material prices supportive: Apart
from coking coal, most raw material prices remained supportive m-o-m. Iron ore
fines, CFR China, actually dropped by $3/t to $109/t, which also allowed a
marginal price fall in some products, as already mentioned above.
Coking coal's August prices rose almost 9% to $267/t CFR India.
Limited availability of spot cargoes and a booking spree from a key end-user
country like India -- which braces for a demand upturn in the post-monsoon
third quarter (October-December) - are factors impelling the uptrend.
Scrap prices were stable at $363/t CFR Turkiye. Prices went down
earlier in the month but recovered when Turkiye returned to "buy"
mode. That apart, India, Bangladesh and even Pakistan showed some interest
towards the month-end. These factors helped to average out the prices. But
scrap looked flat also because of lack of global demand for steel.
Outlook
Iron ore prices are firming up on hunches that steel demand would
pick up September onwards, especially in China and India. However, longs demand
globally is not expected to pick up anytime soon considering the macro
indicators of inflation, currency erosion and lack of demand.
Source: Steel mint