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Summary:

Monthly Report on China Construction Steel Market for August, 2010

China construction steel market rose amid fluctuation in August 2010 as steel mills pushed ahead with maintenance, the relationship between supply and demand eased slightly, raw materials price increased and steel mills hiked ex-works prices.

Government at all levels will further push ahead with energy saving and emission reduction as MIIT previously announced a list and ordered the listed enterprises to wash out obsolete capacity before the end of September. Construction steel demand is likely to keep strong since indemnificatory housing construction and post-disaster reconstruction will accelerate in September, a traditional hot consumption season. Moreover, steel mills are not enthusiastic in increasing production as most steel mills are on the brink of break-even point in view of current market price. It is predicted that China construction steel market will keep rising amid fluctuation with the bottom well above prior lows.

I Review on August market

I.1 Construction steel production and exports both posted monthly decrease while apparent consumption increased steadily

I.1.1 Daily output of rebar in July obviously declined over a month earlier

I.1.2 July construction steel exports fell down sharply versus June

I.1.3 Apparent consumption increased steadily

I.2 Fixed assets and real estate investment growth remained high despite of a monthly decrease

I.3 3 Construction steel inventory edged slightly lower

I.4 The growth of Central Bank's money supply continued slowing

II Outlook on September Market

II.1 Construction steel demand is likely to keep strong as the nation will push ahead with indemnificatory housing construction to control real estate sector

II.2 Government at all levels will obviously push ahead with energy saving and emission reduction as late September is the deadline for enterprises to close obsolete capacity required by MIIT

II.3 To maintain stable economic growth will be the main keynote of macro control and supply of funds will remain ample

II.4 Raw material price rose amid fluctuation in August and steel mills are still under the pressure of high operating cost

II.5 Market price runs lower than ex-works price in some regions again as steel mills by large raise ex-works prices

Table 1: Spot price of China wire rod/ rebar in August

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

Graph 1: Q235 6.5mm wire rod price trend in August 2010

Graph 2:  HRB335 20mm rebar price trend in August 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: Monthly apparent consumption of construction steel in 2009-2010

Graph 10: Cumulative 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 construction steel inventory in 2009-2010

Graph 14: China money supply growth in 2009-2010

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

China HRC/CRC market showed across-the-board price rise in August. Average price of 1.0mm CR plate was CNY 5301 per tonne, an increase of CNY 121 per tonne over the prior month; average price of 2.75mm and 5.75mm HRC were CNY 4420 per tonne and CNY 4288 per tonne, up CNY 28 and CNY 44 over the prior month.  

Apparent steel consumption will remain high in September on HRC/CRC basis, but the growth rate may decline. Steel demand will sustain rapid rise in September. China HRC/CRC market will continue upwards trend in September.  

I China HRC/CRC market rose unsteadily in August

II Apparent consumption declined sharply in July

III Outlook on China HRC/CRC Market for September

III. 1 China industrial production sustain stable growth and investment grow steadily

III.2 Growth rate of money supply slipped, but credit availability still loosens

III.3 Apparent consumption will continue maintaining high

III.4 China HRC/CRC inventory maintained high in August

III.5 Global steel market may pick up upwards trend

III.6 Chinese steel mills raised HRC/CRC price

III.7 Steelmakers’ operating cost will not drop on higher iron ore price

Table 1: SteelHome China Steel Price Index (SH_CSPI) in August

Table 2: HR/CR Prices in China Major Markets in August

Table 3: China HRC/CRC Production in July

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

Table 5: EXW price of HRC in August

Table 6: EXW Price of CRC in August

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

Graph 2: China HRC monthly production 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: Accumulative production of China CRC in 2009-2010

Graph 7: China CRC import/export in 2009-2010

Graph 8: Apparent consumption of China CRC in 2009-2010

Graph 9: Daily production of China HRC/CRC in 2009-2010

Graph 10: Daily apparent consumption of China HRC/CRC in 2009-2010

Graph 11: China HRC marketplace inventory in 2008-2010

Graph 12: China CRC market inventory in 2008-2010

Graph 13: SteelHome global steel price for 2008-2010

Monthly Report on China Iron Ore Market for August 2010

China iron ore price picked up entirely in August. Iron ore price in northern China leveled off after a slight rise at early of this month and dipped a little bit at the end of August. By contrast, iron ore price in southern China hiked.

Affected by national policy of energy-saving and emission reduction as well as pessimistic attitude towards future market, steel mills cut down iron concentrates after a period of inventory replenish. Iron ore price slowed down to rise.

Quotation of Indian fines (a grade of 63.5 percent) once topped US$ 157-160 per tonne but waned to US$ 152-154 per tonne (CIF) at late August.

Iron concentrates price is likely to continue the downward trend of last August at early September, however, promoted by increasing purchase from steel mills at mid of the month, it is predicted that iron concentrates price is potential to ascend in the future.

I. China iron ore price jumped up as a whole in August 2010

II Analysis on China iron ore market in September 2010

II.1 China available iron ore supply kept falling in August

II.2 Price of imported ore dropped after reaching a peak

II.3 Ocean freight to maintain fluctuation in September 2010

II.4 Iron ore inventory waned overall at ports

II.5 China steel price fluctuated upward in August

II.6 Iron ore benchmark price is potential to fall in Q4 2010

II.7 Iron ore delivery from Indian retained at low level

II.8 Iron ore purchasing of domestic steel mills was limited to some degree

Table 1：China Iron Ore Price in Oct.2009-Aug. 2010

Table 2：Steel Price Changes at Domestic Market

Graph 1: China iron ore price in 2009-Aug. 2010

Graph 2: China iron ore output VS import in 2009-July 2010

Graph 3: Price contrast between domestic & imported ore in 2009-Aug. 2010

Graph 4: International ocean freight in 2009-Aug.2010

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

Monthly Report on China Coke Market for August 2010

China ’s metallurgical coke market inched up in August on the back of stele price hike. On the increased demand, coke producers reduced the idled capacity rate. Overseas steel mills conducted facility maintenance during summer vocation, the move dragged down China 's coke export deals.

Recently China is working hard to phase out backward capacity, which as a result restricts coke capacity release. China 's steel price will spiral up in September, and steel mills will expand coke purchasing, but it is difficult for the growth rate of coke price to leap up since steel mills are still pressurized by high production cost. We expect a stable coke market in September.

I Review on China coke market in August 2010

I.1 Chinese coke price rallied

I. 2 Coke market warmed up on the increase of steel price & transaction

I. 3 Coking coal prices kept stable; coke producers' loss shrank

I. 4 Coke byproducts prices

I. 5 Coke exports remained increasing

II. Outlook on China coke market for September 2010

II.1 Chinese coke production to increase slowly

II.2 Coke demand to keep stable

II.3 Non-Chinese coke demand to increase

II.4 Coking coal price to remain stable with upward trend

Table 1: Chinese Coke Price Change in August

Table 2: Steelworks' Purchase Prices of Coking Coal in August

Graph 1: Shanxi metcoke & prime coking coal price in 2009-2010

Graph 2: Coke byproducts price in Shanxi in 2009-2010

Graph 3: China coke export & export price in 2009-2010

Graph 4: China coke inventory at ports in 2009-2010

Graph 5: China coke production in 2009-2010

Graph 6: Global pig iron production (sans China) in 2009-2010

Graph 7: China coking coal imports in 2009-2010