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China weekly: Steel prices show mixed trends amid volatile futures

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BigMint Bureau

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30 Nov 2024, 14:24 IST

China weekly: Steel prices show mixed trends amid volatile futures

Iron ore spot prices increase by $4/t w-o-w

Domestic HRC prices up, export offers stable

China's steel market experienced mixed trends this week. Shanghai Futures Exchange (SHFE) prices for billets rose w-o-w, while HRC futures remained stable and rebar futures prices declined over the same period. Notably, domestic steel prices, especially that of billets and HRC, increased due to shifts in raw material costs and futures market trends. While rebar prices fell, coking coal prices remained largely stable, and iron ore prices ticked upward.

1. Iron ore spot prices increase by $4/t w-o-w: The benchmark iron ore fines price rose by $4/t w-o-w to $105/t CFR China on 29 November following improved market stability and an uptick in both primary and secondary market offers. Although seaborne restocking is mostly complete, there are always last-minute procurements that may support prices. Additionally, another PBOC meeting is scheduled for December, which typically boosts sentiment. Steel mills are keeping inventory levels low, with limited interest in purchasing full-size cargo.

Iron ore inventories at China's major ports decreased by 2.2 million tonnes (mnt) to 148.5 mnt on 28 November compared to last week, according to SteelHome data.

a) Spot pellet premium rise w-o-w: Spot pellet premium for Fe 65% grade pellet increased by $0.35/t w-o-w to $17.70/t CFR China on 29 November.

b) Spot lump premium increase w-o-w: Spot lump premium rose by $0.003/t to $0.1370/dmtu on 29 November.

2. Coking coal prices largely stable: Coking coal prices remained largely stable w-o-w at $203/t FOB amid a significant gap between offers and bids.

3. Chinese billet prices rise RMB 50/t ($7/t) w-o-w: Billet prices in China's Tangshan rose by RMB 50/t ($7/t) w-o-w to RMB 3,110/t ($429/t), including 13% VAT, on 29 November. Positive market sentiments from raw material prices, rising rebar futures along with improvement in trades have supported the billet prices. Meanwhile, SHFE rebar futures (January, 2025 delivery) increased by RMB 41/t ($6/t) w-o-w to RMB 3,318/t ($458/t) on 29 November, 2024.

4. Domestic HRC prices edges up: Chinese HRC offers edged up w-o-w by RMB 30/t ($4/t) to RMB 3,470/t ($479/t), amid stable HRC futures and improved domestic demand. SHFE HRC futures (January 2025 contract) remained unchanged w-o-w at RMB 3,492/t ($482/t) .

China's export offers for steel held steady at $510/t this week, but trading activity remained sluggish due to ongoing uncertainty in the global market.

5. Domestic rebar prices drop w-o-w: China's rebar offers dropped by RMB 30/t ($4/t) w-o-w to RMB 3,240/t ($447/t) against RMB 3,270/t ($452/t) in the previous week due to sluggish demand and decline in rebar futures. SHFE rebar futures (January 2025 contract) dropped by RMB 100/t ($14/t) w-o-w to RMB 3,227/t ($446/t).

Outlook

The China's steel industry is likely to remain volatile in the near term. Anticipated economic stimulus measures from the Chinese government could boost demand for steel and raw materials. However, the effectiveness of these measures and their potential to offset the global economic slowdown remain uncertain.