China Steel Profit Increases In March Amid Rising Export Prices

In March, exports of Chinese rolled metal products increased, while steel prices in China continued to recover.

In March, the export price of hot rolled steel (HRC) averaged $ 267.50 /t, which is 7% more than in February.

Domestic and export prices for Chinese steel rebounded from lows in December and January. This follows a peak in HRC's export premium over imported iron ore and coking coal of over USD 370 /t in May 2018, amid rising steel prices and lower iron ore prices.

In addition, the supply of iron ore from Brazil is expected to decline after Vale suspended production following the fatal collapse of a tailings dam at one of the company's sites.

In the domestic market, Chinese HRC prices including VAT in Shanghai rose 1.6% to RMB 3848 /t ($ 573 /t) in March.

Infrastructure-related steel demand is expected to pick up as warmer weather in China boosts projects and the pace of construction.

This could help offset weaker demand from other industrial and commercial sectors such as automakers.

A VAT cut in China from April 1 could help support the steel market and strengthen the consumer sector.

China's manufacturing purchasing managers' index rose to 50.5 in March, up 1.3 points from February, reaching its highest level since October.