Chinese semis influenced by higher iron ore prices and strong demand

SteelOrbis Shanghai With the international iron ore negotiation situation becoming clear with 19 percent rise in iron ore price, semi-finished producers found the necessary ground to increase their prices globally. The rise in semis prices in international market also supported Chinese semis price. The FOB Black Sea Port quotation for CIS-origin semis is $400-405/mt, $10/mt higher compared with two weeks ago. One week ago, the export price of Chinese 20MnSi billet had reached $418-420/mt CFR Vietnam level. With the rise in domestic semis prices this week, steel mills continued to hike their quotations, and the price of common carbon billet increased to $405/mt FOB. With the continuous rise in semis price, some semis manufacturers began thinking that prices would go down again. However, in view of international market factor, this kind of worry seems groundless. At present, it is hard to forecast how much further the prices may rise, but Chinese domestic semis prices will certainly not drop before the international market prices begin dropping. Basing on their high export prices, leading Chinese mills have hiked their ex- factory prices for domestic market, especially in East China. Last week, major rebar producer Shagang Steel increased its rebar prices by RMB 200/mt ($25) and wire rod prices by RMB 150/mt ($19). Baosteel hiked all products' ex-factory prices by RMB 200-500/mt ($25-62). Furthermore, it is estimated that the five steel mills in North China will raise the rebar price by RMB 200/mt ($25), which may be followed by some other mills. Influenced by these two factors, finished steel market prices went up considerably. In particular, the rise in market price in East and South China where rebar price is relatively lower, pushed local semis prices up dramatically. As rolling mills increased their billet and slab purchases, semis manufacturers in Hebei province accepted more orders from steel mills in East and South China. Therefore, they hiked their ex-factory prices continuously since last Monday.