STEEL DIPPING
Steel output is also softer, with consultancy MySteel
reporting production of construction steel products, including
rebar and wire rod, dropped 1.04% week-on-week to 4.23 million
tonnes for the period ended April 6.
Over the same period apparent demand for steel products
dropped 6.7% week-on-week to 4.36 million tonnes, MySteel said.
What the drop in prices, seaborne iron ore imports and steel
output appear to be pointing to is a moderation in demand
expectations in China.
It may be the case that the initial expectations after the
dramatic ending of COVID-19 restrictions late last year were too
optimistic, and what's happening now is simply a reassessment.
Certainly, none of the indicators are pointing to weakness,
rather it's more a case of sky-high optimism being replaced by a
more moderate, but still positive reality.
One factor always worth keeping in mind is the messaging
coming out of Beijing, with reports that China is considering an
official target of lowering steel output by 2.5% in 2023 from
last year's 1.018 billion tonnes.
If this lower target is confirmed, it implies that the
strong start to steel production in the first two months of the
year, when output gained 5.6% over the same period in 2022, will
moderate over the rest of this year.
This suggests that iron ore and coking coal demand will
remain solid, but may not rise much over 2023 as a whole.
The opinions expressed here are those of the author, a columnist
for Reuters.
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GRAPHIC-China iron ore imports vs spot price: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Christian Schmollinger)
(The opinions expressed here are those of the author, a
columnist for Reuters.)
By Clyde Russell
LAUNCESTON, Australia, April 11 (Reuters) - After a
stellar start to the year there are signs that the key steel and
iron ore sectors are losing momentum in China, raising concerns
as to the strength of the rebound in the world's second-largest
economy.
Prices across the steel complex have been retreating in
recent sessions, while China's imports of iron ore appear to be
moderating after a fast start to the year.
China produces more than half of the world's steel and buys
about 70% of global seaborne iron ore, one of two key raw
materials for steel, the other being coking coal.
The spot price for benchmark 62% iron ore for delivery to north China, as assessed by commodity price
reporting agency Argus, ended at $118.80 a tonne on Monday, the
lowest since Jan. 9.
The price has slipped 10.9% since hitting its peak so far in
2023 of $133.40 a tonne on March 15, reached amid market
optimism over future steel demand as Beijing moved to stimulate
the economy after ending its strict zero-COVID policy that had
crimped growth last year.
Coking coal prices have also come under pressure, with
Singapore-traded contracts that mirror the free-on-board price
in Australia , the world's largest exporter of the fuel,
dropping to $289.90 a tonne on Monday.
This is the lowest price since Dec. 30 last year and the
contract has lost 23.9% since its 2023 peak of $381 tonne,
reached on Feb. 17.
Chinese domestic steel prices have also come under pressure,
with benchmark Shanghai rebar futures ending at 3,946
yuan ($574) a tonne on Monday, the weakest since Dec. 26 and
down 8.8% from the peak so far this year of 4,328 yuan on March
14.
It's not just prices that are declining, there are signs
that iron ore volumes and steel output are also weakening
slightly.
China's iron ore imports are estimated by Refinitiv at 94.17
million tonnes in March, which translates to a daily rate of
3.04 million tonnes.
This would be down from the 3.29 million tonnes a day for
the first two months, according to official customs data,
although it's worth noting that imports for the January-February
period were 7.3% above the same months in 2022.
April imports may also heading for a soft outcome, with
Refinitiv tracking arrivals of 82.34 million tonnes, although
this figure is likely to rise in coming weeks as more cargoes
are assessed as likely to be delivered by the end of the month.
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