China Weekly: Steel prices edge up following uptrend in SHFE futures

The Chinese steel market saw an uptickin prices this week, largely mirroring the rise in Shanghai Futures Exchange (SHFE) prices. Domestic steel product prices, including billet, hot-rolled coil (HRC), and rebar, saw w-o-w increases. Iron ore prices also experienced a slight upward trend this week.

1. Iron ore spot prices increase by $2/t w-o-w: The benchmark iron ore fines price rose by $2/t w-o-w to $105/t CFR China on 13 December 2024. Seaborne prices were boosted by positive sentiment following China's Central Economic Work Conference on 11-12 December, which emphasised active macroeconomic policies and boosted domestic demand. However, portside trading remained subdued, focusing on medium-grade fines, as winter blast furnace maintenance dampened demand, particularly in the northern region.

Iron ore inventories at China's major ports increased by 2.05 million tonnes (mnt) to 148.15 mnt on 12 December compared to last week, according to SteelHome data.

a) Spot pellet premium remains firm: Spot pellet premium for Fe 65% grade pellet remained firm w-o-w at $17.80/t CFR China on 11 December.

b) Spot lump premium stable: Spot lump premium remained stable w-o-w at $0.1350/dmtu on 13 December.

2. Coking coal index rises: BigMint's fortnightly coking coal index rose in recent deals. Australian coking coal prices rose by $6/t post puck-up in demand in key markets.

3. Chinese billet prices up RMB 30/t (4/t) w-o-w: Billet prices in China's Tangshan rose by RMB 30/t ($4/t) w-o-w to RMB 3,100/t ($426/t), including 13% VAT, on 13 December. Prices have been positively influenced by rising raw material and finished steel prices, stronger rebar futures, and improved trading activity.

4.Domestic HRC offers edge up w-o-w: China's HRC offers edged up by RMB 10/t ($1/t) w-o-w to RMB 3,470/t ($477/t) from RMB 3,460/t ($476/t) last week, following the rise in SHFE HRC futures (May 2025 contract). SHFE HRC futures rose by RMB 15/t ($2/t) w-o-w to RMB 3,505/t ($482/t) against RMB 3,490/t ($480/t) last week. Furthermore, Chinese HRC export offers rose by $5/t w-o-w to $495/t compared to $490/t a week ago.

5.Domestic rebar offers rise w-o-w: China's domestic rebar offers rose by RMB 110/t ($15/t) w-o-w to RMB 3,370/t ($463/t) against RMB 3,260/t ($448/t) a week ago due to a surge in demand that was fuelled by rising futures prices. SHFE rebar futures rose by RMB 48/t ($7/t) w-o-w to RMB 3,377/t ($464/t) from RMB 3,329/t ($478/t) last week.

Shagang Steel has kept prices of its long products unchanged for mid-December sales. Effective prices now are at:

• Rebar (16-25 mm): RMB 3,700/t ($509/t)
  
  
• Coiled rebar (8-10 mm): RMB 3,710/t ($511/t)
  
  
• Wire rod (6-10 mm): RMB 3,620/t ($498/t)
  
  

Outlook

The Chinese steel market is showing short-term optimism due to positive policy signals, rising raw material prices, and uptrend in futures contracts. However, the long-term outlook remains uncertain due to the global economic slowdown, volatile market conditions, and high iron ore inventories. While there are short-term opportunities, the market's future trajectory will depend on the effectiveness of government policies and global economic recovery.