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Analysis: China steel margins rose in March on higher export prices

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Analysis: China steel margins rose in March on higher export prices

  • Author
  • Hector Forster
  • Editor
  • James Burgess
  • Commodity
  • Metals

London — Chinese export hot-rolled coil and rebar steel mill premiums to iron ore and coking coal prices rose in March as steel prices continued to rebound in China, analysis by S&P Global Platts shows.

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The Platts China export HRC spread averaged $267.50/mt in March, up 7% from February.

Chinese domestic and export steel prices have rebounded from lows in December and January. This followed a peak in the HRC export premium over imported iron ore and premium hard coking coal of over $370/mt in May 2018, on surging steel prices and weaker iron ore costs.

Winter output restrictions and upcoming seasonal demand in some industries has tightened the market for forward deliveries. And a cut in iron ore supply is expected from Brazil, after Vale has idled production following the fatal collapse of a tailings dam at one of the company's sites.

Platts Chinese HRC SS400 March export prices rose 3.5% on the month to $531.10/mt FOB.

In the domestic market, Chinese ex-stock HRC prices including VAT in Shanghai rose 1.6% to Yuan 3,848/mt ($573/mt) in March.

Iron ore prices for benchmark 62% Fe fines averaged $85.70/dry mt CFR China in March, slightly softer than February, but around $10/dmt higher than in January.

Premium low-vol HCC rose over 2% to $210.77/mt CFR China in March from February.

Infrastructure-related steel demand is expected to pick up as warmer weather in China aids project developments and construction rates.

This may help offset weaker demand from other industrial and commercial sectors, such as from automakers.

China's VAT reduction from April 1 could help support the steel market, and inject strength into consumer sectors.

China's manufacturing purchasing managers' index rose to 50.5 in March, up 1.3 points from February, reaching the highest level since October.

-- Hector Forster, hector.forster@spglobal.com

-- Edited by James Burgess, newsdesk@spglobal.com