Steel prices boosts with uncertainties in iron ore market

It is reported that domestic steel prices rose across-the-board last week with limited margin. The future market is under certain pressure.

China claimed that it would never accept 33% decline on benchmark for fiscal 2009 earlier clinched between Australian supplier and Nippon Steel Corporation. At the same time, mining heavyweights, Rio and BHP published to combine their western Australian iron ore production operation in a 50:50 JV impacting related market, such as seaborne freight market.

In general, construction steel market prices rocketed by over CNY 100 per tonne in Harbin, Beijing, Tianjin and Shenyang. Steel plate price also gained over CNY 50 per tonne in Jinan, Fuzhou and Taiyuan. Price for cold rolled coil climbed up by CNY 40 per tonne. Large and medium section remained basically steady with modest rise.

According to statistics by Mysteel, 31st rebar markers and 23 wire rod producers adjusted their ex works price this week, with the majority pulling it up. Hebei Iron & Steel Group lifted up its EXW price by CNY 80 per tonne Shagang Group by CNY 30 per tonne.

Steel futures soared, helping to promote spot market price. Price for billet and slab remained strong. 20MnSi billet was quoted at some CNY 3300 per tonne in Jiangsu Province. However, the coming rainy season will cast negative influence on steel demand. Therefore, construction steel prices are expected to edge up with limited margin.

Market prices for medium plate increased by less than CNY 20 per tonne in Shanghai, Nanjing and Hangzhou by CNY 30 per tonne in Wuhan and Zhengzhou and by CNY 20 per tonne to CNY 50 per tonne in Beijing, Tianjin, Shenyang and Harbin. 5 steel makers raised EXW prices. Shagang lifted up its price by CNY 220 per tonne. As market price for HRC exceeded CNY 3400 per tonne many large-scale steel makers resumed production. Thus, the future market will be under great pressure since HRC stock volume remained comparatively stable. Domestic HRC price has already been higher than the international market level.

Seaborne freight rate rocketed up. At weekend, the rate for Brazil-China route and Brazil-West Australia soared to USD 43.625 per tonne and USD 19.373 per tonne. The World Steel Association, or worldsteel, was highly critical of the Rio/BHP iron ore deal, saying it should be blocked on competition grounds. Domestic experts analyzed that the combine would promote the iron ore giants' bargaining power and weaken influence of the benchmark in place for 40 years.

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