- The approaching holiday is dampening demand and causing price fluctuations.
- Baosteel raised prices on its hot-rolled coil (HRC) for March sales.
- Shagang Steel rolled over long steel prices for early-Feb’24
Chinese steel prices experienced a w-o-w decrease, driven by fall in Shanghai Futures Exchange (SHFE) futures. Spot iron, billet, coking coal prices witnessed a w-o-w decline. In addition, domestic HRC and rebar prices showed their downward trend this week, while HRC export offers increased.
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1.Iron ore spot prices decline as restocking ends: The benchmark iron ore fines price sharply dropped by $8.6/t to $128/ t CFR China on 2 February. This decrease in price is due to lower demand for finished steel and the completion of iron ore procurement by major mills in China. The manufacturing purchasing managers’ index (PMI) in China has been consistently declining since October, indicating a reduced demand for iron and steel. Additionally, the absence of buying interest in
China’s portside market has contributed to the decrease in iron ore prices. Steel mills are also expected to operate at a reduced capacity next week due to scheduled shutdowns and maintenance for the Lunar New Year holidays.
a) Spot pellet premium stable w-o-w: Spot pellet premium for Fe 65% grade pellets remained stable w-o-w at $14.35/t on 31 January.
b) Spot lump premium falls w-o-w: Spot lump premium inched down by 0.019 w-o-w to $0.1305/dmtu on 2 February.
2. Coking coal prices edge down w-o-w: coking coal prices dropped by 2% w-o-w to $322/t FOB on 3 February, 2024 amid reduced offer levels.
3. Chinese billet prices fall by RMB 100/t ahead of Lunar holidays: Chinese domestic billet prices fell by RMB 100/t ($14/t) to RMB 3,550/t ($498/t) on 2 February, 2024 against 25 January. Lower trades, drop in rebar futures, raw materials and finished steel prices have weighed on billet prices. Meanwhile, Chinese SHFE rebar futures decreased by RMB 142/t ($20/t) to RMB 3,825/t ($537/t) on 2 February, 2024 against 25 January, 2024
4. Domestic HRC prices decrease w-o-w: Domestic hot-rolled coil (HRC) prices in China declined by RMB 50/t ($7/t) w-o-w, reaching RMB 3,970 /t ($552/t) in the current week, compared to RMB 4,020/t ($559/t) in the previous week. This decline in HRC prices followed the downward trend in SHFE HRC futures amid weak demand. The SHFE HRC futures (May contract) fell by RMB 125/t ($17) w-o-w, reaching RMB 3,975/t ($553/t) on 2 February. Moreover, Chinese HRC export offers edged up by $5/t w-o-w to $575/t.
5. Rebar prices inched down w-o-w: Chinese rebar prices inched down by RMB 10/t ($1/t) w-o-w, reaching RMB 3,880/t ($540/t) compared to RMB 3,890/t ($541/t) in the previous week. SHFE rebar futures (May contract) decreased by RMB 135/t ($19/t) to RMB 3,836/t ($533/t) on 2 February.
China’s rebar prices were subdued as demand weakened and steel billet prices drop. Many buyers are away for the Lunar New year holiday, and construction activity has slowed, leaving buyers with ample rebar stocks. Few sellers remained active, and those who are taking a cautious wait-and-see approach.
6. Baosteel raises HRC prices m-o-m for March’24 sales: Baosteel has increased HRC prices by RMB 100/t ($14/t) for March, 2024 sales, after keeping flat in February, 2024, according to BigMint sources. In addition, thick plate prices also increased by RMB 100/t ($14/t) m-o-m. Prices rose amid increased offers from competition like Japan’s Tokyo steel. However, Chinese SHFE HRC futures remained volatile with approaching Lunar holidays in China.
7. Shagang Steel rolls over long steel prices w-o-w: China’s Shagang Steel has rolled over long steel prices for early-February, 2024 sales. Effective prices-
- Rebars (16-25 mm): RMB 4,120/t ($576/t)
- Wire rods (6-10 mm): RMB 4,270/t ($597/t)
- Coiled rebars (8-10 mm): RMB 4,260/t ($596/t)
- All prices are ex-mill, including VAT.
Outlook:
In the short term, steel prices will be slightly down before the Spring Festival holiday due to the holiday factors, the gradual freezing of transactions, and insufficient investment demand. After the holiday, the steel market may see a slight rebound due to the implementation of monetary policy, boosted market confidence, and weakening cost support.