Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr
Issue link: https://emj.epubxp.com/i/689616
96 E&MJ; • JUNE 2016 www.e-mj.com MARKETS A majority of Chinese steel market par- ticipants believe prices will likely fall due to weaker domestic demand, with the outlook for construction steel par- ticularly bleak, according to the latest S&P; Global Platts China Steel Senti- ment Index (CSSI), which showed a headline reading of 46.98 out of a possi- ble 100 points in May. The May index dropped 22.14 points from 69.12 in April, recording the weak- est reading since February—and is now 42.44 points below March's record of 89.42. A reading above 50 indicates expectations of an increase/expansion and a reading below 50 indicates a de- crease/contraction. The outlook for new domestic orders for steel for the coming month fell by 23.65 points from the previous month to 47.20 in May, while expectations for export orders edged down by 4.74 points to 44.44. Price expectations for long steel prod- ucts, such as rebar, slumped by 60 points from April to 30 in May. The price outlook for fl at steel products, such as hot rolled coil, fell 39.20 points to 41.43 in May. Editor's note: the price for iron ore has dropped from $65.85 per dry metric ton (dmt) this time last month to $49.90/dmt this month. The outlook for crude steel production in May dropped 3.57 points from the pri- or month to 57.14. Steel market partici- pants expected steel inventories to start climbing again this month, with the read- ing for this measure rising 31.23 points from April to 67.58 in May. "The big downturn in the outlook for domestic steel orders and prices is the big concern and unfortunately all the ingre- dients for a price correction appear to be in place, judging by the results of the in- dex," said Paul Bartholomew, senior man- aging editor of steel and raw materials for S&P; Global Platts. "The big and sudden shift from opti- mism to pessimism—particularly in the outlook for construction steel prices— is further indication of how sentiment driven the market has become," Bar- tholomew said. "Restocking has been a major reason why prices have climbed this year but steel inventories are tipped to rise while steel production is predicted to stay at current high levels. This could put prices under pressure in the next month or so," he added. The CSSI is based on a survey of ap- proximately 70 to 85 China-based market participants including traders and steel mills. Data is compiled by S&P; Global Platts' Shanghai steel team. Separate to the CSSI, the Platts Chi- na export hot rolled coil price assessment in April averaged $430/mt free on board (FOB) China. This was up 2% on $421.6/ mt FOB in March. The S&P; Global Platts China Steel Sen- timent Index survey plays no role in Platts' formal price assessment processes. For more information, visit www.platts. com/IM.Platts.Content/Methodology References/MethodologySpecs/steel.pdf. China Steel Sentiment Retreats Into Negative Territory Gold and silver prices provided by KITCO Bullion dealers (www.kitco.com). Platinum group metals prices provided by Johnson Matthey (www.platinum.matthey.com). Non-ferrous base and minor metal prices provided by London Metal Exchange (www.lme.co.uk). Iron ore prices provided by Platts Iron Ore Index. Currency exchange rates were provided by www.xe.com. (May 31, 2016) Precious Metals ($/oz) Base Metals ($/mt) Minor Metals ($/mt) Exchange Rates (U.S.$ Equivalent) Gold $1,215.00 Aluminum $1,548.00 Molybdenum $15,300 Euro (€) 1.117 Silver $15.95 Copper $4,700.00 Cobalt $24,100 U.K. (£) 1.441 Platinum $974.00 Lead $1,691.50 Canada ($) 0.764 Palladium $542.00 Nickel $8,465.00 Iron Ore ($/dmt) Australia ($) 0.725 Rhodium $665.00 Tin $16,200.00 Fe CFR China $49.90 South Africa (Rand) 0.064 Ruthenium $42.00 Zinc $1,924.00 China (¥) 0.152 S&P; Global Platts China Steel Sentiment Index–May 2016 May 2016 Change from April (points) CSSI (Total New Orders) 46.98 -22.14 New Domestic Orders 47.20 -23.65 New Export Orders 44.44 0 -4.74 Steel Production 57.14 0 -3.57 Flat steel prices 41.43 -39.20 Long steel prices 30.00 -60.00 Inventory held by traders 67.58 - 31.23 (a fi gure of more than 50 indicates expectations of an increase; under 50 indicates a decrease)