China weekly: Steel prices show mixed trends w-o-w amid decline in futures

China's steel market saw mixed price movements across products this week. Iron ore spot prices remained relatively stable, while coking coal saw a slight uptick. However, the post-Lunar New Year period brought declines in Chinese billet, HRC, and rebar prices, influenced by fluctuating raw material costs, subdued demand, and fall in futures markets.

The China Iron and Steel Association (CISA) reported that the total steel inventory at key Chinese enterprises stood at 16.21 million tonnes (mnt) in early-February 2025. Inventory levels increased by 860,000 tonnes (t) or 5.6% from 15.35 mnt in late-January.

1.Iron ore spot prices remain largely stable: The benchmark iron ore fines price remained firm at $107/t CFR China on 14 February 2025 following the weather-related disruptions in Western Australia as a cyclone impacted supply dynamics. As per reports, seaborne cargoes with favorable laycan dates may see price premiums, though the upward trend lacks solid fundamental support. Prices at Chinese ports have remained largely stable, with restocking noted in northern and eastern regions, as the market prepares to restock cargoes from the ports.

a) Spot pellet premium falls: Spot pellet premium for Fe 65% grade pellet decreased by $1.7/t w-o-w to $16.35/t CFR China on 12 February.

b) Spot lump premium rises: Spot lump premium rose by $0.004/t to $0.1580/dmtu on 14 February.

2.Coking coal prices inch up w-o-w: Australian coking coal prices rose marginally $3/t w-o-w. PHCC was assessed at $190/t FOB Australia. Market had mixed sentiments with some delays seen at Australian ports sue to weather related disruptions. Also, some buying inquiries from India and China were seen, however, decline in Chinese met coke prices and improved domestic coal production post CNY weighed on bids

3.Chinese billet prices fall by RMB 50/t ($7/t): Billet prices in China's Tangshan fell by RMB 50/t ($7/t) w-o-w to RMB 3,040/t ($419/t), including 13% VAT, on 14 February against 7 February. Volatility in raw material costs, finished steel prices, and rebar futures, combined with subdued trading activity after Lunar New Year Holidays, weighed on billet prices. However, SHFE rebar futures (May 2025 delivery) inched up marginally by RMB 10/t ($1/t) w-o-w to RMB 3,362/t ($463/t) on 14 February against 7 February.

4.Domestic HRC prices drop: Chinese HRC offers dropped by RMB 60/t ($8/t) w-o-w to RMB 3,350 ($461/t) from RMB 3,410/t ($469/t) last week, following the decline in SHFE futures. SHFE HRC futures (May 2025 contract) fell by RMB 167/t ($23/t) w-o-w to RMB 3,386/t ($466/t) as compared to RMB 3,553/t ($489/t) a week ago. This decline in prices is attributed to lower raw material costs and weak downstream demand. The slow recovery of downstream demand following the seasonal lull is also contributing to the price decrease. Moreover, China's HRC export offers dropped by $5/t w-o-w to $470/t against $475/t last week.

Baosteel, a Chinese steel giant, has increased HRC prices by RMB 100/t ($14/t) m-o-m for March sales, according to sources. The company lifted prices amid volatile HRC prices on the Shanghai Futures Exchange following the Lunar New Year holidays. Moreover, hot-dip galvanised steel prices rose by RMB 100/t ($14/t).

5.Domestic rebar prices decrease w-o-w: China's rebar offers decreased by RMB 60/t ($8/t) w-o-w to RMB 3,260/t ($449/t) against RMB 3,320/t ($457/t) previous week. SHFE rebar futures (May 2025 contract) declined by RMB 93/t ($13/t) w-o-w to RMB 3,268/t ($450/t) as compared to RMB 3,361/t ($463/t) last week. The domestic rebar prices declined due to weaker demand caused by a persistent cold wave affecting numerous regions. This cold wave hindered the recovery of construction activities, resulting in decreased demand for rebar.

China's Shagang Steel kept prices of its rebars unchanged for mid-Feb'25 sales. However, prices of coiled rebars and wire rods increased by RMB 100/t ($14/t). Post-revision, prices stood at:

• Rebars (16-25 mm): RMB 3,500/t ($479/t)
  
  
• Coiled rebars (8-10 mm): RMB 3,610/t ($494/t)
  
  
• Wire rods (6-10 mm): RMB 3,520/t ($482/t)
  
  

Outlook

China's steel market is facing uncertainty after the Lunar New Year, with a mixed outlook. The strength of the demand recovery, especially from the construction industry, will be crucial in determining steel prices. Stronger demand could support prices, while a weaker recovery might lead to further price declines. Key factors to watch include government stimulus measures and infrastructure projects, which could boost demand. However, rising steel inventories could pose a risk, potentially driving prices down if demand doesn't rebound quickly.