China weekly: Steel prices show mixed trend amid weak demand

• SHFE steel futures remain stable
  
  
• HRC export offers fall by $5/t w-o-w
  
  
• Shagang Steel rolls over long steel prices
  
  

Chinese steel prices showed mixed trends this week amid subdued demand. Prices of HRC, rebar and coking coal remained stable w-o-w, whereas HRC export offers fell w-o-w. However, prices of iron ore and billet showed a downward trend this week.

1.Iron ore spot prices fall w-o-w: Benchmark iron ore fines prices dropped $5.7/t w-o-w to $115.4/t CFR China on 1 March 2024. Prices fell amid thin buying and weak downstream steel margins. However, enquiries in the seaborne market improved on lower prices. Some reports claimed that smaller mills are buying material in small quantities amid their low inventory. Major steelmakers are waiting for clearer market sentiments to emerge.

Iron ore inventory at major Chinese ports increased by 1.8 mnt to 134.9 mnt on 29 February compared to 22 February, according to SteelHome data.

a) Spot pellet prices inch down: Spot premium for Fe 65% grade pellets decreased by $ 0.3/t w-o-w at $13.25/t on 28 February.

b) Spot lump premium stable: The spot lump premium remained largely stable w-o-w at $0.1280/dmtu on 1 March.

2.Coking coal prices unchanged: Coking coal prices remained unchanged w-o-w at $314/t FOB on 2 March amid low trading activities.

3.Chinese billet prices fall w-o-w: Chinese billet prices fell w-o-w by RMB 30/t ($4/t) to RMB 3,520/t ($495/t) on 1 March. Volatility in raw material and finished steel prices, rebar futures and lower trade have put pressure on billet prices. Meanwhile, Chinese SHFE rebar futures decreased by RMB 27/t ($4/t) w-o-w to RMB 3,763/t ($529/t) on 1 March.

4.Domestic HRC prices flat w-o-w: Domestic hot-rolled coil (HRC) prices in China remained flat w-o-w at RMB 3,920/t ($545/t) this week amid stable SHFE Futures. SHFE HRC futures (May contract) remained range-bound w-o-w at RMB 3,911/t ($544/t) on 1 March. However, Chinese HRC export offers dropped $5/t w-o-w to $555/t this week, as buyers are hesitant to place new orders. This caution likely stems from two factors: time needed to clear existing inventories and a lack of confidence in future demand, leading buyers to keep stock levels low.

5.Rebar prices remain stable w-o-w: Chinese rebar prices remain flat for the week at RMB 3,850/t ($535/t), due to heavy rains in parts of eastern China which dampened the post-Lunar New Year rebound in demand for rebar. SHFE rebar futures (May contract) slightly down by RMB 10/t ($1/t) to RMB 3,788/t ($526/t) on 01 March.

6. Shagang keeps longs prices unchanged: China's Shagang Steel has continued to keep long steel prices flat for early-March'24 sales.

Effective prices:

• Rebar (16-25 mm): RMB 4,120/t ($572/t)
  
  
• Wire rod (6-10 mm): RMB 4,270/t ($593/t)
  
  
• Coiled rebar (8-10 mm): RMB 4,260/t ($592/t)
  
  
• All prices are ex-mill, including VAT.
  
  

Outlook

Despite challenging weather conditions impacting overall market activity, traders are cautiously optimistic about March. They believe steel demand will likely improve compared to January and February, but a significant surge is unlikely.