China’s domestic steel margins have slumped since the start of September due to high iron ore prices and a "correction" in finished steel prices, S&P Global Platts data shows.
Domestic rebar margins have almost halved since the start of the month, falling to $19.83/mt Sept. 10, the lowest level since the end of August 2019. Hot-rolled coil margins were $21.39/mt Sept. 10, the weakest level since early May this year.
Chinese physical and futures steel prices have softened in recent days on mixed sentiment, with some participants feeling prices may be due a correction after a buoyant third quarter market.
Chinese domestic HRC prices rose by 26% over April-September, while domestic rebar rose 10% over the same period, Platts data shows.
Looser credit conditions, along with strong property and infrastructure demand, have helped support the steel market since China came out of lockdown in the second half of March.
The outlook for iron ore is mixed, with some steel market sources believing prices have peaked and will weaken in Q4, providing some steel margin relief.
But mining sources said they were seeing extremely strong demand and expected seaborne iron ore prices to remain high in the final quarter.
-- Paul Bartholomew, Analyst Sylvia Cao
Source : Steel Business Briefing
