China weekly: Steel prices show mix trend w-o-w; futures remain strong

• Iron ore spot prices increase by $4/t w-o-w
  
  
• Domestic HRC prices stable, export offers down
  
  

China's steel market exhibited mixed trends this week, despite the upward trajectory of Shanghai Futures Exchange (SHFE) prices. Domestic HRC prices remained stable, while rebars rose w-o-w. In contrast, billet prices fell on a weekly basis. Where raw materials are concerned, spot iron ore prices increased, whereas coking coal declined this week.

1. Iron ore spot prices rise by $4/t w-o-w: The benchmark iron ore fines price rose by $4/t w-o-w to $101/t CFR China on 22 November 2024 supported by improved downstream market fundamentals. However, trading activity has slowed as market direction remains unclear, with some end-users seeking cost-effective low-grade cargoes and mills preparing for a winter sinter cut. As per reports, ongoing destocking efforts bolstered downstream steel demand and can sustain high pig iron production levels.

Iron ore inventories at China's major ports increased by 2.4 million tonnes (mnt) to 150.7 mnt on 21 November compared to last week, according to SteelHome data.

a) Spot pellet premium rises w-o-w: Spot pellet premium for Fe 65% grade pellets increased by $0.5/t w-o-w to $17.35/t CFR China on 20 November.

b) Spot lump premium increases w-o-w: Spot lump premium rose by $0.003/t to $0.1340/dmtu on 22 November.

2. Coking coal prices fall w-o-w: Coking coal prices fell on a weekly basis to $204/t FOB Australia. Prices declined, as several cargoes remained unsold after being available in the market for several days.

3. Chinese billet prices fall despite rise in rebar futures: Billet prices in Tangshan fell by RMB 20/t ($3/t) w-o-w to RMB 3,060/t ($422/t) on 22 November against 15 November. Prices include 13% VAT. Rising portside inventories, fluctuations in raw material and finished steel prices are driving billet prices downward.. However, SHFE rebar futures (January, 2025 delivery) increased by INR 45/t ($6/t) to stand at RMB 3,277/t ($452/t) on 22 November, 2024 against 15 November.

4. Domestic HRC prices stable w-o-w: Chinese HRC offers remained stable w-o-w at RMB 3,440/t ($475/t) following the uptrend in SHFE futures. SHFE HRC futures (January 2025 contract) went up by RMB 35/t ($5/t) w-o-w to RMB 3,494/t ($482/t) against 3,459/t ($477/t) in the previous week.

China's export offers decreased by $10/t w-o-w $485/t from $495/t last week. This decline is attributed to competitive offers from other regions.

5. Domestic rebar prices up w-o-w: China's rebar offers increased by RMB 30/t ($4/t) w-o-w to RMB 3,270/t ($451/t) against RMB 3,240/t ($447/t) in the previous week, following the uptrend in SHFE futures. SHFE rebar futures rose by RMB 49/t ($7/t) w-o-w to RMB 3,327/t ($459/t) as compared to RMB 3,278/t ($452/t) a week ago.

Moreover, Shagang Steel has reduced its long steel products' prices for late-November sales after keeping them stable in mid-November. Prices of rebars, coiled rebars, and wire rods dropped by RMB 150/t ($21/t). Effective prices stood as follows:

• Rebar (16-25 mm): RMB 3,700/t ($511/t)
  
  
• Coiled rebar (8-10 mm): RMB 3,710/t ($512/t)
  
  
• Wire rod (6-10 mm): RMB 3,620/t ($500/t)
  
  

Outlook

China's steel market is expected to remain volatile due to fluctuating raw material prices and mixed demand trends. Winter production cuts and destocking efforts may further influence market direction.