Chinese steel prices show mixed trends w-o-w ahead of Labour day holidays
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- Steel inventories at CISA-affiliated mills fall
- Shagang Steel increases long steel prices
China's steel prices showed a mixed trend this week. Domestic prices of HRC, rebar, coking coal and billets decreased significantly, while prices of iron ore remained stable. However, HRC export prices increased.
The China Iron and Steel Association (CISA) reported total steel inventory of key enterprises in mid-April 2024 at 18.116 million tonnes (mnt), a decline of 137,700 t or 0.75% compared to 18.253 mnt in early-April.
The average daily crude steel output of CISA-affiliated mills stood at 2.119 mnt in mid-April, up by 0.33% from 2.111 mnt in early-April. Output rose by 3.5% m-o-m against 2.048 mnt in mid-March.
1.Iron ore spot prices remain stable w-o-w: The benchmark iron ore fines price remained rangebound w-o-w at $118/ t CFR China on 26 April amid pre-holiday restocking demand. Renewed interest from steel mills in restarting operations has led to a surge in demand for iron ore, coinciding with the upcoming Labour Day holidays. However, a few steel mills are keeping their stocks at a reduced level, resulting in little demand for procurement in the seaborne market for them.
Iron ore inventory at major Chinese ports increased by 1.5 mnt to 144.6 mnt on 25 April compared to last week, according to SteelHome data.
a) Spot pellet premium down w-o-w: Spot pellet premium for Fe 65% grade pellets inched down by $ 0.3/t w-o-w at $11.55/t on 24 April.
b) Spot lump premium stable w-o-w: Spot lump premium remained largely stable at $0.0825/dmtu on 26 April.
2.Coking coal prices decline w-o-w: Coking coal prices dropped by by 4% w-o-w to $245/t, on 27 April amid oversupply of material.
3.China's billet prices inch down by RMB 20/t ($3/t) w-o-w: Chinese billet prices edged down w-o-w by RMB 20/t ($3/t) to RMB 3,470/t ($489/t) on 26 April. Volatility in raw material, finished steel prices and increasing port inventories before Chinese Labour day holidays have weighed on billet prices. However, Chinese SHFE rebar futures increased w-o-w by RMB 10/t ($1/t) to RMB 3,685/t ($519/t) on 26 April.
4.HRC prices inch down: China's HRC prices inched down by RMB 20/t ($3/t) w-o-w to RMB 3,810/t ($526/t) against RMB 3,830/t ($529/t) last week, with decline in SHFE futures. SHFE futures (May contract) edged down by RMB 19/t ($3/t) to RMB 3,823/t ($528/t) as compared to RMB 3,842/t ($530/t). However, China's HRC export offers went up by $5/t w-o-w to $540/t for the week.
5.Rebar prices edge down w-o-w: Chinese rebar prices edged down by RMB 20/t ($3/t) w-o-w to RMB 3,790/t ($523/t) against RMB 3,810/t ($526/t) previous week. China's infrastructure projects are driving the surge in rebar demand. In addition, SHFE futures (May contract) went slightly down by RMB 8/t ($1/t) w-o-w to RMB 3,670/t ($506/t) on 26 April as compared to RMB 3,678 ($508/t) on 19 April.
While some Chinese steel users are interested in building inventories of construction steel ahead of the Labour Day holiday (May 1-5), many are planning to postpone purchases and reduce their planned buying volumes.
China's Shagang Steel has increased long steel prices by RMB 50/t ($7/t) w-o-w for late-Apr'24 sales. Effective prices:
- Rebar (16-25 mm): RMB 3,970/t ($548/t)
- Wire rod (6-10 mm): RMB 4,020/t ($555/t)
- Coiled rebar (8-10 mm): RMB 4,010/t ($554/t)
- All prices are ex-mill, including VAT.
Outlook:
Market participants in China will be on holiday from 1 to 5 May 2024. Rumours related to a Chinese crackdown on HRC deals without VAT can have some ramifications on trades or prices. However, SHFE futures have declined d-o-d keeping market sentiments mixed.
