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Published on 13/07/2020 11:49:30 AM | Source: Emkay Global Financial Services Ltd.

Metals & Mining Sector Update - Baosteel raises steel price for Jul with massive $40/t hike By Emkay Global

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Baosteel raises steel price for Jul with massive $40/t hike

* China's Baotsteel raised prices for July deliveries: (1) HRC prices up by $40/t; (2) Heavy plate prices up by $21/t; (3) Galvanized prices up by $37/t. Domestic steel prices in China are currently in the range of $519-521/t compared to $482-484/t a month ago.

* This was on the back of a mild hike for Jun deliveries. For June deliveries, HRCwas up $7/tand heavyplateup $14/t, whileno hike in galvanized.

 

Key reasons for hike in steel price in China:

* Iron ore has crossed$100/t again due to the closing of Itabira iron ore mining complex of Vale, where 188 workers tested Covid-19positive. This will keep the seaborne price of iron ore strong in the near term.

* Demand for steel has been robust in China after Covid-19due to govt stimulus to complete infra projects.

* Liquidity in the Chinese main markets have been plentiful following the issuance of Special Purpose Bonds. Hence,traders are not hard pressed to liquidate their inventory despite high levels.

 

Outlook

* Domestic steel prices softened by Rs500-1000/t due to (1) tepid demand and (2) falling input costs,especially iron ore.

* International prices remained strong due to (1) high international iron ore prices and (2) robust demand from China on the back of stimulus-driven infrastructure projects

 

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