China weekly: Steel prices show mixed trends; futures maintain volatile streak

• SHFE futures show volatile trends
  
  
• Shagang Steel reduces long steel prices
  
  

China's steel market saw significant price fluctuations this week. Notably, domestic steel product prices, such as billet and hot-rolled coil (HRC), increased due to shifts in raw material costs and futures market trends. Conversely, rebar prices dropped amidst volatile futures. Meanwhile, iron ore prices held steady, while coking coal prices declined.

The average daily crude steel output of CISA-affiliated mills stood at 2.072 million tonnes (mnt) in mid-October 2024, an increase of 1.1% from 2.049 mnt in early-October 2024. CISA reported that the total steel inventory at key enterprises reached 15.46 mnt in mid-October 2024. This represents a rise of 5% or 730,000 tonnes (t) from 14.73 mnt in early-October 2024.

1.Iron ore spot prices remain stable w-o-w: The benchmark iron ore fines price remained stable w-o-w at $101/t CFR China on 25 Oct'24 amid sluggish trading activity and cautious market sentiment despite supportive macroeconomic measures in China. China has cut its one-year loan prime rate and the five-year LPR by 25 basis points each to 3.10% and 3.6%, respectively, as part of government efforts to boost the economy. However, slowing construction in northern China due to falling temperatures has shifted steel to southern markets. Additionally, anticipation of policy easing before next week's meeting may provide short-term market stimulation.

Iron ore inventories at China's major ports increased by 0.5 million tonnes (mnt) to 147.65 mnt on 24 October compared to last week, according to SteelHome data.

a) Spot pellet premium remain steady w-o-w: Spot pellet premium for Fe 65% grade pellets remain unchanged w-o-w at $16.70/t CFR China on 23 October.

b) Spot lump premium remain stable w-o-w: Spot lump premium remained stable at $0.1400/dmtu on 25 October.

2. Coking coal prices decline: Coking coal prices fell slightly to $199/t FOB, as prices were under pressure, as some cargoes for reselling came into the market.

3.Billet prices rise by RMB 40/t ($6/t) w-o-w: Billet prices in Tangshan rose by RMB 40/t ($6/t) to RMB 3,110/t ($437/t) on 25 October against 18 October. Prices include 13% VAT. Supportive market sentiments from raw materials, hike in rebar futures along with expected policy support from the government have supported billet prices. Meanwhile, SHFE rebar futures (January 2025 delivery) increased by INR 40/t ($6/t) to RMB 3,376/t ($474/t) on 25 October against 18 October.

4. Domestic HRC prices increase w-o-w: China's HRC offers inched up by RMB 20/t ($3/t) w-o-w to RMB 3,430/t ($482/t) as compared to RMB 3,410/t ($479/t) last week, following the uptrend in SHFE futures. SHFE HRC futures (January 2025 contract) increased by RMB 37/t ($5/t) w-o-w to RMB 3,522/t ($495/t) from RMB 3,485/t ($489/t) previous week. However, Chinese HRC export offers fell sharply by $20/t w-o-w to $505/t FOB as compared to $525/t a week ago, amid weaker global market sentiments.

5. Domestic rebar prices decreases w-o-w: China's rebar offers dropped by RMB 60/t ($8/t) w-o-w to RMB 3,540/t ($497/t) against RMB 3,600/t ($506/t) in the previous week. SHFE rebar futures, however, displayed a volatile trend for the week.

China's Shagang Steel has reduced prices of its long steel products by RMB 100/t ($14/t) for late-October sales. Notably, the company kept prices stable for mid-October. Following the latest revision, prices are at -

• Rebar (16-25 mm): RMB 3,850/t ($541/t)
  
  
• Coiled rebar (8-10 mm): RMB 3,860/t ($543/t)
  
  
• Wire rod (6-10 mm): RMB 3,770/t ($530/t)
  
  

All prices are ex-mill, including VAT.

Outlook

China's steel market outlook remains cautiously optimistic, though volatility persists. Fluctuating raw material costs, government policies, and global economic conditions will continue to influence the market. While recent stimulus measures, including interest rate cuts, are expected to boost construction and steel demand, global economic uncertainties may temper the pace of recovery.