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Steel Input Costs Hold Up-The 18th China(Guangzhou)Int¡¯l Fastener & Equipment Exhibition
3/2/2017 fastener expo |
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Following China¡¯s return from its New Year holiday there were expectations that raw material costs for steelmaking might well slide. While coking coal costs have declined to around US$175/tonne, iron ore prices have risen to above US$90/tonne.
By 15th February FOB prices for premium hard Australian coking coal were around US$175/tonne, a fall of 22% since the beginning of 2017, with further signs of weakening. However, the price remains around US$100/tonne higher than this time last year.
Increased spot trading may stabilise the price, particularly as China¡¯s National Development and Reform Commission (NDRC) is reported to be considering reapplying an annual limit on coal mining operations. In April last year it applied a 276 operational days annual cap on coal mining, which helped to trigger the rapid increase in seaborne coking coal prices. In November the restriction was relaxed to 330 operational days per year but as seasonal demand now wanes over-capacity as well as pollution appear to be key concerns for the government. China also reportedly refused a 16,000 tonne shipment of coal from North Korea, on the surface a response to the test firing of a ballistic missile contrary to international sanctions, but perhaps an easy gesture given concerns on coal supply.
Seaborne 62%Fe iron ore to Qingdao has increased in cost since the New Year, rising above US$92/tonne. Chines port inventories are reported to have fallen to around ten days supply although demand from mills is said to be lacklustre. The cost increase runs contrary to pre New Year forecasts, with speculation on Chinese futures markets still apparently a factor. The NDRC has again implored major Chinese steel makers to increase production of high-grade steels, particularly for construction and infrastructure, supporting future demand expectations. High quality imported ore is required for higher grade steels and also improves productivity for more modern mills.
-The 18th China(Guangzhou)Int¡¯l Fastener
& Equipment Exhibition
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