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Summary:

Monthly Report on China Construction Steel Market for September 2010

China construction steel market rose amid fluctuation in September 2010 while the prices in some markets of East China even hit year-to-date new high. Construction steel price surged up in early September as supply showed tightness for the time being on increasing efforts on power-usage restriction and emission cut. However, it fell down amid fluctuation in the middle and end of this month as profit-taking of traders mounted up the pressure of oversupply.

October remains to be a traditional consumption season and Ministry of Housing and Urban-Rural Development (MOHURD) requests to put all indemnificatory housing projects into operation before the end of September, which will spur construction steel demand up.

I Review on September market

I.1 Daily construction steel output obviously rebounded, exports kept sliding and oversupply pressure mounted up

I. 2 Fixed assets and real estate investment growth continued slowing

I. 3 Construction steel inventory kept dropping

I.4 New loans maintained steady growth while Central Bank realized net injection for the fourth straight week

II Outlook on October Market

II.1 4 trillion yuan investment target is ensured to be completed in the second half of this year and the nation is pushing ahead with indemnificatory housing construction

II.2 The nation will resolutely push ahead with emission cut and September production is bound to decline, which will hence reduce supply in the marketplaces

II.3 China reiterated to continue moderately ease monetary policy and proactive fiscal policy, expectation of RMB appreciation will give rise to hot money inflow and money supply will remain abundant

II.4 Raw material prices remains high and operating cost keeps rising

II.5 Ex-works prices were obviously higher than market price after the sharp hike in early September

Table 1 Spot price of China wire rod/ rebar in September

Table 2 September ex-works prices in China’s leading steel mills

Graph 1 Q235 6.5mm wire rod price trend in September 2010

Graph 2 HRB335 20mm rebar price trend in September 2010

Graph 3 Monthly output and growth of construction steel in 2009-2010

Graph 4 Accumulative output and growth of construction steel in 2009-2010

Graph 5 Daily output of construction steel in 2009-2010

Graph 6 Construction steel import in 2009-2010

Graph 7 Construction steel export in 2009-2010

Graph 8 Semis import and export in 2009-2010

Graph 9 Cumulative apparent consumption of construction steel in 209-2010

Graph 10 Monthly apparent consumption of construction steel in 2009-2010

Graph 11 China’s urban fixed assets investment in 2009-2010

Graph 12 Real estate investment in 2009-2010

Graph 13 China money supply growth in 2009-2010

Graph 14 China construction steel inventory in 2009-2010

Monthly Report on China HRC/CRC Market for September, 2010

China HRC/CRC market dropped after hitting high in September. Average price of 1.0mm CR plate in China was CNY 5359 per tonne, up CNY 58 over late August; that of 2.75mm and 5.75mm HRC were CNY 4451 per tonne and CNY 4330 per tonne, up CNY 31 and CNY 42 per tonne over late August.

HRC/CRC production may slip in September and October due to government’s measures in reducing energy consumption. China growth remain stable and October is traditional hot consumption season. Steel demand will keep rapid rise. Iron ore price may continue to move at a high level, which support steel price. SteelHome predicts an upward trend of HRC/CRC in October.

I China HRC/CRC market scaled back after rising high in September

II China HRC production hit new high in August and exports slumped

III Outlook on China HRC/CRC market for October

III.1 Industrial production and investment growth is poised to stabilize

III.2 Credit loans maintain stable rise

III.3 China HRC/CRC production may drop

III.4 China HRC/CRC inventory remain high

III.5 Global steel price may continue to rise

III.6 Chinese steel mills hike ex-works price

III.7 Iron ore price may move at a high level in October

Table 1 SteelHome China Steel Price Index (SH_CSPI) in September

Table 2 HR/CR Prices in China Major Markets in September

Table 3 China HRC/CRC Production in August

Table 4 CRC Output, Import/export and Supply in August, 2010

Table 5 EXW price of HRC in September

Table 6 EXW price of CRC in September

Graph 1 Average price of China HRC/CRC during 2009-2010

Graph 2 China HRC monthly output in 2009-2010

Graph 3 Accumulative production of China HRC in 2009-2010

Graph 4 China HRC import/export in 2009-2010

Graph 5 Apparent consumption of HRC in 2009-2010

Graph 6 China CRC monthly production in 2009-2010

Graph 7 Accumulative production of China CRC in 2009-2010

Graph 8 China CRC import/export in 2009-2010

Graph 9 Apparent consumption of CRC in 2009-2010

Graph 10 Daily production of China CRC in 2009-2010

Graph 11 China HRC marketplace inventory in 2009-2010

Graph 12 China CRC marketplace inventory in 2009-2010

Graph 13 SteelHome Global Steel Price Index from 2009-2010

Graph 14 Global HRC Price Trend in 2008-2010

Graph 15 Global CRC Price Trend in 2008-2010

Global HRC Price Trend in 2008-2010

Monthly Report on China Iron Ore Market for September 2010

China iron ore price fluctuated slightly in September. Affected by energy-saving and emission reduction policy early this month, lots of steel mills who produced with blast furnace in northern China cut down production, however, it gradually resumed from late September. Iron concentrates price in northern China went up after fall, nevertheless, that in southern China stabilized comparatively.

Due to tight supply, quotation of Indian ore appeared firm, currently, quotation of Indian fines (Fe content of 63.5 percent) has fallen to US$ 145-147 per tonne (CIF) but returned to US$ 148-150 per tonne at the end of this month (CIF).

Boosted by increasing procurement from steel mills in October, iron concentrates price is likely to go up, however, due to unclear future of steel mills’ production, iron concentrates price is unlikely to go up massively.

I China iron ore price vibrated mildly in September 2010

II Analysis on China iron ore market in October 2010

II.1 China available iron ore supply is likely to go up in October

II.2 Price of imported ore swung slightly

II.3 Ocean freight to maintain a slight fluctuation in October 2010

II.4 Iron ore inventory waned continuously at ports

II. 5 China steel price fluctuated upward in September

II.6 Iron ore benchmark price from three iron ore tycoons slid by 10-13 percent

II.7 Iron ore delivery from India to go up mildly

II.8 International iron ore export cost is inclined to rise in the future

II.9 Iron concentrates procurement from domestic steel makers to recover

Table 1 China Iron Ore Price in Nov.2009-Sep.2010

Table 2 Steel Price Changes at Domestic Market

Graph 1 China iron ore price in 2009-Sep.2010

Graph 2 China iron ore output VS import in 2009-Sep.2010

Graph 3 Price contrast between domestic and imported ore in 2009-Sep.2010

Graph 4 International ocean freight in 2009-Sep.2010

Graph 5 China iron ore import & inventory at ports in 2009-Sep.2010

Monthly Report on China Coke Market for September 2010

China's metallurgical coke prices inched upward in September, while the transactions declined. Part of steel mills in East & North China were asked to cut production so as to reduce energy consumption, coke demand cooled down, which as a result dragged down coke price growth. In foreign countries, steel mills have been on summer vocation, so their coke orders from China dived vertically. However, in October, steel mills both at home and abroad will uplift capacity utilization rate gradually, and some mills will start to stock coke for winter use, coke demand is expected to lighten up. SteelHome predict that China 's coke market price will grow up slightly in October and the export will rewake up.

I Review on China coke market in September 2010

I.1 Chinese coke price vibrated slightly

I.2 Increasing steel mills in production cut or suspension; coke demand turned bleak

I.3 Coking coal price mainly kept stable; coke producers realized Break Even Point

I.4 Coke exports dived drastically