Chinese steel prices increase w-o-w with rise in SHFE futures
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- SHFE futures show an upward trend
- Export offers remain stable
Chinese steel prices showed an upward trend this week post-Qingming Festival. Domestic prices of HRC, rebar, iron ore and billets increased significantly, whereas, coking coal prices remained flat for the week. However, HRC export prices remained stable amid low demand globally.
1.Iron ore spot prices sharply climb by $13/t w-o-w: The benchmark iron ore fines prices significantly increased w-o-w by $13/t to $112/ t CFR China on 12 April, 2024 amid recovery in downstream steel demand. Seaborne iron ore prices continued to rise this week following the improvements in steel sales in the Chinese domestic market. The portside offers also increased as steelmakers noted improvement in margins and better restocking these days. The trade volume increased as buying interest and market sentiments improved after the holidays.
Iron ore inventory at major Chinese ports were up by 1.65 mnt to 143.6 mnt on 11 April compared to the last week according to SteelHome data.
a) Spot pellet premium drops w-o-w: Spot pellet premium for Fe 65% grade pellets decreased by $ 0.25/t w-o-w to $11.55/t on 9 April.
b) Spot lump premium up: Spot lump premium inched up by 0.002 to $0.0530/dmtu on 12 April, 2024 against 5 April.
2. Coking coal prices remain flat w-o-w: Coking coal prices remained stable w-o-w at $224/t FOB on 13 April, 2024 amid tepid demand from major importing countries.
3.China's billet prices rise by RMB 70/t ($10/t) post-holidays: Chinese billet prices rose by RMB 70/t ($10/t) to RMB 3,410/t ($471t) post-Qingming holidays on 12 April against 8 April. Improvement in steel margins, increase in restocking activity, finished steel and rebar futures have supported billet prices. Meanwhile, Chinese SHFE rebar futures increased by RMB 68/t ($9/t) to RMB 3,628/t ($501/t) on 12 April as against 8 April.
4.HRC prices increase w-o-w: Domestic HRC prices in China increased by RMB 80/t ($11/t) w-o-w to RMB 3,780/t ($522/t) against RMB 3,700/t ($511/t) previous week, following the upward trend in HRC futures. SHFE HRC futures (May contract) rose by RMB 72/t ($10/t) w-o-w to RMB 3,768/t ($521/t) on 13 April against RMB 3,692/t ($510/t) on 3 April. However, Chinese HRC export offers remained stable at $535/t for the week amid Eid holidays in Middle East (ME).
5.Rebar prices rise w-o-w: Chinese rebar prices slightly jumped by RMB 130/t ($18/t) w-o-w to RMB 3,650/t ($504/t) as compared to RMB 3,520/t ($486/t) a week ago. Moreover, SHFE rebar futures (May contract) were hiked by RMB 108/t ($15/t) w-o-w to RMB 3617/t ($500/t) on 12 April against RMB 3,509/t ($485/t) on 3 April.
Though improved weather in China favours construction activity, lack of project funding and delays in major projects are dampening overall steel demand. This could lead to a slowdown in steel consumption even during the peak construction season.
6.Baosteel reduces HRC prices: Baosteel has decreased HRC prices by RMB 100/t ($14/t) m-o-m for May, 2024 sales, after keeping that unchanged in April. Moreover, prices for hot-dip galvanized (DQ level) has also been reduced by RMB 100/t ($14/t).
7. Shagang Steel keeps long steel prices flat: China's Shagang Steel has continued to keep long steel prices stable for mid-April, 2024 sales. Effective prices:
- Rebar (16-25 mm): RMB 3,920/t ($542/t)
- Wire rod (6-10 mm): RMB 3,970/t ($549/t)
- Coiled rebar (8-10 mm): RMB 3,960/t ($547/t)
- All prices are ex-mill, including VAT.
Outlook: Domestic demand appears to be recovering after the holidays, driven by rising steel mill margins and restocking activity. This is reflected in the upward trend of SHFE futures and domestic prices of HRC, rebar, iron ore, and billets. However, long-term steel consumption could be dampened by lack of project funding and delays in major construction projects.
