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China weekly: Steel prices show mixed trend amid volatile SHFE futures

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BigMint Bureau

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24 Aug 2024, 14:11 IST

China weekly: Steel prices show mixed trend amid volatile SHFE futures

Shagang Steel reduces long steel prices

Chinese HRC export offers fall

The Chinese steel market experienced price volatility this week. Domestic steel product prices, including billet, hot-rolled coil (HRC), and rebar, showed improvement after a downtrend over several weeks, driven by fluctuations in raw material costs and futures market trends. Iron ore prices saw a slight increase, while coking coal prices continued to decline.

The average daily crude steel output of CISA-affiliated mills was 1.993 million tonnes (mnt) in mid-August 2024, marking a slight decrease of 0.5% from 2.003 mnt in early August. CISA reported that total steel inventory at key enterprises reached 16.45 mnt in mid-August, up by 553,400 tonnes (t) or 3.48% from 15.901 mnt in early August.

1.Iron ore spot prices rise by $4/t w-o-w: The benchmark iron ore fines price increased w-o-w by $4/t to $96/t CFR China on 23 August amid recovery in rebar prices, which rose due to relatively low inventories, signaling stronger demand. However, buying interest was relatively low. The consistent supply of medium-grade fines and improvement in steel product prices have supported the iron ore prices. Additionally, the approaching end of hot weather in China is expected to boost construction activity, which could further support steel demand. Iron ore inventories in China's major ports dropped by 0.4 mnt to 149.2 mnt on 22 August compared to the last week, according to SteelHome data.

a) Spot pellet premium stable w-o-w: Spot pellet premium for Fe 65% grade pellets remained stable at $17/t CFR China on 21 August.

b) Spot lump premium inches down w-o-w: Spot lump premium dipped by $0.012/dmtu to $0.1550/dmtu on 23 August.

2. Coking coal prices drop w-o-w: Coking coal prices dropped by $6/t w-o-w to $199/t FOB. Prices fell on excessive supply and low buying interest.

3. Chinese billet prices edge up w-o-w: Billet prices in Tangshan edged up by RMB 40/t ($6/t) w-o-w to RMB 2,900/t ($407/t) on 23 August. Volatility in raw material, finished steel prices and rebar futures kept supporting billet prices this week. Prices include 13% VAT. SHFE rebar futures (October, 2024 delivery) rose by RMB 76/t ($11/t) w-o-w to RMB 3,154/t ($443/t) on 23 August.

4.Domestic HRC offers rise w-o-w: Chinese HRC offers rose by RMB 10/t ($1/t) w-o-w to RMB 3,160/t ($444/t) as compared to RMB 3,150/t ($442/t) previous week, following an upward trend in SHFE HRC futures (October contract) prices. SHFE HRC futures edged up by RMB 23/t ($3/t) w-o-w to RMB 3,240/t ($455/t) against RMB 3,217/t ($452/t) a week ago. On the other hand, Chinese HRC export offers decreased by $25/t w-o-w to $455/t as of $480/t last week.

5.Domestic rebar offers increase w-o-w: Chinese domestic rebar offers increased by RMB 20/t ($3/t) w-o-w to RMB 3,200/t ($449/t) against RMB 3,180/t ($446/t) last week, mirroring an increase in SHFE rebar. SHFE rebar futures for the October contract rose by RMB 68/t ($10/t) w-o-w, reaching RMB 3,180/t ($446/t) compared to RMB 3,112/t ($437/t) the previous week.

China's Shagang Steel has reduced long steel prices of rebar, wire rod and coiled rebar by RMB 100/t ($14/t) for late-August, 2024 sales. Effective prices:

Rebar (16-25 mm): RMB 3,450/t ($483/t)

Wire rod (6-10 mm): RMB 3,370/t ($472/t)

Coiled rebar (8-10 mm): RMB 3,460/t ($485/t)

All prices are ex-mill, including VAT.

Outlook

The Chinese steel market is displaying mixed signals, with improving domestic demand but potential challenges in the export market. Future price movements will depend on a range of factors, including global economic conditions, government policies, and supply chain dynamics.