Summarization and outlook of key market developments - Far East

Chinese Market

Scrap

In particular, prices for HMS 1 in the east of the country have reached the peak level – RMB 3,500/t delivered by this week, which corresponds to $527/t delivered at the current exchange rate $1 = RMB 6.63. Hereinafter local prices include 17% VAT. As earlier reported, quotations of the same material were within the range of RMB 3,280-3,300/t ($495-498/t) delivered in late December. At the same time, producers differed in their pricing strategy last week: a number of companies raised offers a few times, while others decided to hit new levels by implementing a single lift. In particular, the largest consumer of scrap Shagang, who has been keeping its purchase prices unchanged for a long time, have increased quotations by RMB 250/t ($38/t) at the end of last week, so its levels are at the top in the region now – RMB 3,530/t ($532/t) delivered. Plants of the Central region are make somewhat lower offers and those in the south have moved their prices for HMS 1 up to RMB 3,350-3,450/t ($505-520/t) delivered by the moment. In particular, Japanese trading companies are ready to sell HMS 2 at $460/t C&F on average, which means about $545-550/t including 17% VAT on imports and average delivery costs, while in late December their offers were not higher than $440/t C&F ($518-524/t CPT). Besides, high export activity amid stable domestic market allows US suppliers to boost quotations of shredded scrap to the Far East up to $490/t C&F ($583/t CPT) against $460/t C&F ($545-550/t CPT) two weeks ago.

Iron Ore

Prices for Indian ore fines (63.5% Fe) are varying in the range of $180-182/t C&F northern ports of China, by $3/t higher than in early January. Traders say 62% Fe content material has been changing hands at $177/t C&F, up $3/t w-o-w. The material of lower quality has been sold at $98-99/t C&F. Offer prices for Indian high quality ore fines (63.5% Fe) keep climbing higher and have by now come close to $183-184/t C&F. The current trend persists mostly due to higher quotations in the finished product segment in China amid still limited iron ore supply. Besides, high activity of steelmakers, who continue making deals, thus fixing the current prices supports the tend. Australian suppliers have been pushing their offers up as well – $174-176/t C&F for 61.5% Fe content fines, against $172-174/t C&F in early January. Australian company Mount Gibson has reportedly managed to sign a contract for supply of ore fines (62% Fe) at $181/t C&F. Nominal prices for Brazilian 64% Fe content material are $175-176/t C&F. Canadian (67% Fe) and Indian (63% Fe) pellets are currently priced at $210/t C&Fand $200/t C&F, respectively.

Japanese & S. Korean Market

Scrap

Export trade is becoming ever more attractive to Japanese scrap collectors. In mid-January importers’ interest in additional volumes of the material has risen, which has been reflected in higher purchase prices. South Korean holding Hyundai Steel is already bidding JPY 38,500/t FOB for Japanese HMS 2, which means $464/t FOB at the exchange rate $1 = JPY 83.005. A week earlier the material was priced at JPY 36,000/t
($434/t) FOB.

Companies from South Korea prefer to buy Japanese material in mid-January. In particular, Hyundai Steel have booked about 30,000-40,000 t of HMS 2 at $464/t FOB which means $490/t C&F including transportation costs. At the same time, large batches of similar material from Japan were available at $440-450/t C&F Pohang, Inchon, Kunsan in late December. Improving US domestic market pushes export prices for US scrap up. As a result, currently, containerized HMS 1&2 (80:20) is being offered to South Korean importers at $465-470/t C&F Pohang, Inchon, Kunsan, by $40-45/t up from late December. Large lots of HMS 1 can be shipped at $515-520/t C&F against $450-455/t C&F at the end of last month. Russian scrap collectors have decided to follow the same pricing policy. So, large lots of Russian A3 material are being offered at an average of $495/t C&F Pohang, Inchon, Kunsan, by $40-45/t higher than two weeks ago.

Indian Market

Scrap

Indian steel scrap importers refuse to cooperate with US and EU exporters considering their offers unacceptable. Market sources say deals for large batches from these regions are unlikely to be made in the short term, since Indian buyers are hardly interested even in small quantities. By now, prices for EU HMS 1&2 (80:20) have moved to $480-490/t Ñ&F Nhava Sheva, up $30-40/t w-o-w. Similar material from the USA is available at $485-495 Ñ&F Nhava Sheva, against $450-455/t Ñ&F in early January. Offers of shredded scrap have been coming from the EU at $510/t Ñ&F Nhava Sheva, while a week ago the material of higher quality was priced at $460-470/t Ñ&F. US scrap collectors insist on further increases too, offering shredded scrap at $515/t Ñ&F Nhava Sheva, up $50-55/t w-o-w.

Fast Eastern Pig Iron Market

Pig Iron

Contract prices in the pig iron market have inched up in the first half of January. Thus, one of the Taiwanese buyers has reportedly purchased 10,000 tonnes of import material at $500-505/t C&F from Posco (South
Korea), which exceeds the level of the latest contracts to this destination by $2-7/t. Currently, offer prices remain at the same level – $500-510/t C&F January-February delivery. Russian exporters have been raising their prices slightly as well, keeping them at the late-December levels ($500-510/t C&F ports of Taiwan).
Besides, some Chinese companies have received offers of Russian pig iron at $510-520/t C&F. Chinese traders are ready to ship Brazilian material from Chinese ports at $500-510/t C&F Taiwan. Traditionally, traders have been the most active in raising prices, which is reflected in their current offers. Thus, Stemcor is
reportedly ready to deliver pig iron at $535/t C&F ports of Taiwan, which is by now the highest quotation.
Indian material is available to Far Eastern consumers at $520-530/t C&F ports of Taiwan and South Korea: 33,000 tonnes have been exported by Vizag Steel through a tender at this price, January-February delivery. The highest bid came from trading company VISA Comtrade AG – $475.9/t FOB Vishakhapatnam. However, consumers may change their strategy by mid-January. Thus, end-users have resumed their activity early this month, which has driven prices for finished product up (+$40/t since early January). Besides, scrap quotations have been following pig iron prices, being only by $25-30/t lower than the latter. In particular, import scrap prices to Taiwan have added $30-35/t by now.

Coke&Coal

In December, buyers signed two contracts with Russian exporters at $419/t C&F and $440/t C&F Goa January and February shipment, respectively. The current prices for coke from Russia are about $440/t C&F
Goa. Chinese material is available at $500-505/t C&F Haldia ($470-480/t C&F in December) in the first half of January, but consumers are in no hurry to accept these levels.

At the moment, Australian high quality coking coal (volatiles – 20.7%, moisture – 9.5%, ash – 9.7%, sulphur 0.6%) is quoted at $290-293/t C&F Chennai, while back in December it was available at $250-258/t C&F. Semi-soft coking coal (ash – 9%, moisture – 10-11%, sulphur – 0.6%, volatiles – 32%) is priced at $215-220/t C&F Chennai now against $185-187/t C&F last month. The above-mentioned prices are just nominal, since there is no available material in the Australian spot market. Coal-mining companies are barely able to fulfill long-term contracts and the situation will hardly improve over the next month. Market participants expect quotations of the material to add another $15-20/t by February.


In these circumstances, Indian importers have switched to the US coking coal market. However, the US material is also quoted quite high, as increased demand from China, Brazil, Europe and local producers has enabled the exporters to implement a substantial increase in prices. Prices for US hard coking coal (ash – 6-7%, moisture – 6-7%, sulphur –0.4-0.5%) have reached $279-282/t C&F Paradip in mid-January, against
$260/t C&F in December. Market participants are sure that prices for coking will add another $5-7/t in January.