China weekly: Steel prices show mixed trends w-o-w; futures remain volatile

China's steel market experienced mixed trends this week. Notably, domestic steel prices, especially that of billets and rebar, decreased due to shifts in raw material costs and futures market trends. While hot-rolled coil (HRC) prices remained flat and iron ore prices were range-bound, conversely coking coal prices showed an uptick.

The average daily crude steel output of CISA-affiliated mills stood at 2.093 million tonnes (mnt) in late-October, an increase of 1% compared to 2.072 mnt in mid-October. CISA reported that total steel inventory at key enterprises reached 13.64 mnt in late-October 2024. This represents a decline of 11.8% or 1.82 mnt from 15.46 mnt in mid-October.

China's steel exports rose by 40.8% y-o-y to 11.182 mnt in October 2024 compared to 7.73 mnt in October 2023, as per the General Administration of Customs. In January-October 2024, exports rose by 23.3% y-o-y to 91.89 mnt against 75.5 mnt in the same period last year.

1. Iron ore spot prices range-bound w-o-w: The benchmark iron ore fines price inched up by $1/t w-o-w to $103/t CFR China on 8 November amid optimistic market sentiment driven by expectations of potential macro-economic stimulus announcements from the ongoing Chinese National People's Congress meeting. This anticipated policy support has spurred increased trading activity and buying interest, particularly for medium-grade fines, reflecting positive outlook on economic measures that could bolster demand. Meanwhile, steel mills are increasingly focusing on medium-grade fines for blending, boosting liquidity for this grade.

Iron ore inventories at China's major ports increased by 0.75 mnt to 149.9 mnt on 7 November compared to the preceding week, according to SteelHome data.

a) Spot pellet premium fall w-o-w: Spot pellet premium for Fe 65% grade pellet decreased by $0.15/t w-o-w to $16.35/t CFR China on 6 November.

b) Spot lump premium largely stable w-o-w: Spot lump premium dipped by $0.001/t to $0.1350/dmtu on 8 November.

2. Coking coal prices pick up: Coking coal prices picked on a weekly basis by 2% at $207/t FOB Australia. Prices moved up on some buying interest witnessed by Chinese traders.

3. China billet prices fall by RMB 30/t ($4/t): Billet prices in Tangshan fell by RMB 30/t ($4/t) to RMB 3,120/t ($435/t) on 8 November against 4 November. Prices include 13% VAT. Volatility in raw material, finished steel prices along with lower trades have weighed on billet prices. However, government policies are expected to boost demand in the near term. Meanwhile, SHFE rebar futures (January 2025 delivery) decreased by INR 58/t ($8/t) to stand at RMB 3,367/t ($469/t) on 8 November against 4 November.

4. Domestic HRC prices remains stable: Chinese HRC offers remained stable w-o-w at RMB 3,500/t ($487/t), HRC prices held steady after a recent surge in futures. SHFE HRC futures (January 2025 contract) edged up by RMB 12/t ($2/t) w-o-w to RMB 3,578/t ($498/t) as compared to RMB 3,566/t ($497/t) a week ago.

China's export offers stood at $510/t showing stability for the week. However, trading activity remained subdued due to sluggish demand, market uncertainty, and the weakening yuan.

5. Domestic rebar prices drop w-o-w: China's rebar offers dropped by RMB 50/t ($7/t) w-o-w to RMB 3,440/t ($479/t) against RMB 3,490/t ($486/t) in the previous week due to sluggish demand. SHFE rebar futures remained volatile for the week.

China's Shagang Steel has kept its long steel products prices stable for early-November sales. Prices of rebars, coiled rebars, and wire rods were rolled over w-o-w. Effective prices stood at:

• Rebar (16-25 mm): RMB 3,850/t ($541/t)
  
  
• Coiled rebar (8-10 mm): RMB 3,860/t ($542/t)
  
  
• Wire rod (6-10 mm): RMB 3,770/t ($529/t)
  
  

All prices are ex-mill, including VAT.

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 its raw materials. However, the effectiveness of these measures and their potential to offset the global economic slowdown remains uncertain.