Steel, iron ore prices in China climb to record highs
Chinese steel prices jumped to record highs on Tuesday, boosted by strong domestic demand and concerns over supply curbs. Construction steel rebar on the Shanghai Futures Exchange scaled the highest level on record, or since 2011, with the benchmark May contract gaining as much as 2.1% to CNY 5,180 per tonne (USD 791) a tonne.
Shanghai prices of hot-rolled coil, also hit the loftiest since 2014 with the benchmark May contract rising 1.3% to CNY 5,589 per tonne (USD 854). Production restrictions in China’s top-steelmaking city of Tangshan during the peak demand season have brought down stocks at warehouses and created a bullish atmosphere for the market.
And adding to the cocktail of price increases in China is that the availability of domestic billet remains constrained in the Tangshan where there are currently restrictions on blast furnace output.
The Q235 150mm square billet price in Tangshan increased to CNY 5,040 per tonne (USD 770). It is reported that Chinese buyers have started accepting imported cargoes at USD 620-63 CFR levels.
The Tangshan Environmental Protection Bureau has fined 15 steel producers and ordered four steel mills to stop operations due to violations found during inspections on April 1-4. The Environment Bureau reported 48 cases of environmental violations and issued total fines of RMB 19.2 million.
Hebei Xinda Iron and Steel Group, Tangshan Jinma Iron and Steel Group, Tangshan Medium and Heavy Plate and Tangshan Songting Iron and Steel were ordered to stop operations due to monitoring falsifications. It is expected to lead to even tighter supply of billet and HR flat steel in the Tangshan area.
The unprecedented surge in steel prices in China is continuing to propel iron ore prices with benchmark physical 62% Australian iron ore fines increasing by USD 2.42 per tonne on 6 March to USD 170.90 per tonne CFR Qingdao. Iron ore price reached its highest level since September 2011 in mid-January, at USD 174.07 per tonne. The benchmark hit an all-time high of USD 191.70 in February 2011.
