- Steel inventories at CISA mills increase in mid-Mar
- SHFE futures show downward trend
- Decline in Chinese HRC export offers by $5/t
Chinese steel prices decreased this week with a fall in SHFE futures. Domestic prices of HRC, rebar, iron ore and billet decreased significantly. However, prices of coking coal remained stable for the week. In addition, the HRC export offers also faced the downtrend.
The China Iron and Steel Association (CISA) reported total steel inventory of key enterprises in mid-March 2024 at 19.533 million tonnes (mnt), an increase of just 9,700 tonnes (t) or 0.05% compared to 19.523 mnt in early-March.
The average daily crude steel output of CISA-affiliated mills stood at 2.048 mnt in mid-March, a decrease of 0.51% from 2.058 mnt in early-March. Also, output inched down by 0.6% m-o-m against 2.1 mnt in mid-February.
1.Iron ore spot prices drop w-o-w: The benchmark iron ore fines price declined by $6/t w-o-w to $102.80/ t CFR China on 28 March 2024 as the buying interest remained lower amid weak fundamentals and continuous drops in the finished steel demand due to poor liquidity. Market participants expressed worry over the slow recovery of downstream steel demand and its effect on iron ore purchasing. As per report, traders were shipping out their cargoes and selling off inventory, anticipating a further drop in iron ore prices.
Iron ore inventory at major Chinese ports increased by 1.6 mnt to 142.1 mnt on 28 March compared to 21 March, according to SteelHome data.
a) Spot pellet premium edges down w-o-w: Spot pellet premium for Fe 65% grade pellets decreased by $ 0.5/t w-o-w to $12.2/t on 27 March.
b) Spot lump premium sharply down w-o-w: Spot lump premium inched down by 0.064 w-o-w to $0.0610/dmtu on 28 March.
2. Coking coal prices remain flat w-o-w: Coking coal prices remained stable w-o-w to $245/t FOB on 30 March amid tepid demand.
3. China’s billet prices drop by RMB 130/t ($18/t) w-o-w: Chinese billet prices fell sharply by RMB 130/t ($18/t) w-o-w to RMB 3,280/t ($454/t) on 29 March against 22 March. Weak demand of raw materials, low steel production, volatility in rebar futures and increasing inventory pressure have weighed on billet prices. Meanwhile, Chinese SHFE rebar futures recorded a significant drop of RMB 200/t ($28/t) w-o-w to RMB 3,412/t ($473/t) on 29 March as against 22 March.
4. Domestic HRC prices decrease w-o-w: Domestic HRC prices in China declined by RMB 40/t ($6/t) w-o-w to RMB 3,730/t ($517/t) against RMB 3,770/t ($522/t) previous week, following the downward trend in HRC futures. The recent drop in demand is attributed to market participants’ negative outlook on the future of the steel product. SHFE HRC futures (May contract) fell by RMB 168/t ($23/t) w-o-w to RMB 3,654/t ($506/t) on 29 March compared to RMB 3,822/t ($529/t) on 22 March. Moreover, Chinese HRC export offers decreased by $5/t w-o-w to $535/t this week.
5. Rebar prices fall w-o-w: Chinese rebar prices declined by RMB 100/t ($14/t) w-o-w to RMB 3,540/t ($490/t) compared to RMB 3,640/t ($504/t) a week ago. Chinese rebar prices continued to drop as demand weakened, reaching their lowest level for the first quarter of 2024. Moreover, SHFE rebar futures (May contract) fell by RMB 164/t ($23/t) to RMB 3,448/t ($478/t) on 29 March as against RMB 3,612/t ($500/t) on 22 March.
Outlook: China’s steel market has slumped again after a temporary uptick last week. While manufacturing is picking up, there are underlying concerns. The ongoing downtrend in real estate and funding restrictions for infrastructure projects due to local government debt are weighing heavily on steel demand. Stockpiles remained high despite being peak season for steel use, raising questions about future demand growth.