China Commodities Weekly - Chinese steel production and exports strong in February

SHFE copper prices made strong gains last week following the strong price recovery on the LME. The SHFE copper front month contract went up to Rmb60,970/t (US$7,817/t) at Friday's close, a huge jump of Rmb3,610/t (US$463/t), or 6.3%, from the previous week's close.

SHFE aluminium prices remained virtually unchanged, despite the strong price surge in copper. The front month aluminium contract recorded a moderate gain of 0.4% WoW to close at Rmb19,600/t (US$2,513/t) on Friday. SHFE registered aluminium stocks fell to 95,392t on Friday, a remarkable decline of 3,985t, or 4.0%, from the previous week's level.

Chinese aluminium and copper trade data for February showed another month of very strong unwrought copper imports; extremely strong Chinese copper concentrates imports - the highest since November 2005; a sharp fall in scrap copper imports, the lowest since January 2004; and further weakness in unwrought aluminium exports against strong growth in aluminium semis exports.

The preliminary steel trade data for February show that China remained a significant net steel exporter. Net exports of steel totalled 3.7mt for February, up from 3.4mt for January. The February exports represented an annualised rate of net exports of 48mt, up from 40mt pa in January.

Last week, the National Bureau of Statistics (NBS) also released steel production data for the first two months of the year. For January and February combined, Chinese steel production rose by 23.1% YoY to 74.3mt. February crude steel production ran at an annualised rate of 471mt pa, while consumption ran at an annualised rate of 419mt pa. Apparent demand in January and February combined was up by 13.4% YoY.

Last week, Chinese spot steel prices dipped slightly. Hot rolled coil was down by 0.6% WoW to $475/t, ex-VAT, but was still 0.1% higher MoM. Cold rolled steel suffered a 0.8% WoW drop to $560/t, and galvanized steel declined by 0.5% to $608/t, without VAT. The rebar price was posted at $357/t, ex-VAT, down by 0.8% WoW, but still up by 0.3% MoM.

Last week, the price for 66% Hebei iron ore fines was quoted at $87/t, ex-VAT, unchanged WoW, but 1.6% higher MoM, while the Indian ore price reached $92/t CIF, increasing by $1/t WoW and by $10/t MoM. Prices have risen by more than the recently imposed $7/t Indian export tax.