Chinese steel prices showed mixed trends this week amid rising SHFE futures. Domestic prices of HRC and rebar remained range-bound for the week. Moreover, iron ore, billet and coking coal prices showed an upward trend.
Crude steel output of the CISA-affiliated mills stood at 2.168 mnt in late-June 2024, a decrease of 0.8% against 2.185 mnt in mid-June. Steel inventory of key enterprises in late-June stood at 14.694 million tonnes (mnt), down by 1.731 mnt or 10.54% compared to 16.425 mnt in mid-June.
1. Iron ore spot prices climb $4/t w-o-w: The benchmark iron ore fines price rose w-o-w by $4/t to $111/ t CFR China on 5 July amid improved demand and robust market fundamentals. At the portside, traders were actively procuring cargoes, while mills mostly showed caution when it came to buying at higher prices. The main focus is on the upcoming third plenary session in mid-July, which may introduce more specific policy incentives. Mills are purchasing on as-needed basis, as the market may fluctuate before the Plenum, leading to expected volatility.
Iron ore inventory at major Chinese ports increased by 1 mnt w-o-w to 149 mnt on 4 July, according to SteelHome data.
a) Spot pellet premium rises w-o-w: Spot pellet premium for Fe 65% grade pellets increased by $ 0.35/t w-o-w to $15.65/t CFR China on 3 July.
b) Spot lump premium up w-o-w: Spot lump premium increased by 0.007 at $0.2070/dmtu on 5 July.
2.Coking coal prices up w-o-w: Coking coal prices edged up by 9% w-o-w to $254/t FOB on 5 July. Prices rose on supply constraints arising due to the fire incident at Anglo American’s Grosvenor mine.
3.Steel billet prices remain supported w-o-w: Billet prices in Tangshan edged up by RMB 20/t ($3/t) w-o-w to RMB 3,330/t ($458/t) on 5 July. Improvement in demand, raw material prices, finished steel prices and rebar futures kept billet prices supported. Prices include 13% VAT. SHFE rebar futures (October 2024) increased by RMB 9/t ($1/t) w-o-w to RMB 3,553/t ($489/t) on 5 July.
4.HRC prices range-bound: Chinese HRC offers remained range-bound this week at RMB 3,700/t ($509/t) amid rising SHFE futures. SHFE HRC futures (October contract) rose by RMB 40/t ($6/t) w-o-w to RMB 3,776/t ($520/t) as compared to RMB 3,736/t ($514/t) a week ago. However, HRC export offers remained stable for the week at $515/t FOB. Chinese HRC exports have seen a slowdown this week.
5. Rebar prices remain stable: Chinese rebar offers remained range-bound for the week at RMB 3,600/t ($495/t). SHFE rebar futures (October contract) increased by RMB 49/t ($7/t) w-o-w to RMB 3,586/t ($493/t) against RMB 3,537/t ($487/t). Construction activity in China has dipped due to extreme weather conditions, leading to a decrease in steel demand.
Shagang Steel has reduced long steel prices by RMB 100/t ($14/t) for early-July sales. Effective prices:
Rebar (16-25 mm): RMB 3,870/t ($532/t)
Wire rod (6-10 mm): RMB 3,820/t ($526/t)
Coiled rebar (8-10 mm): RMB 3,910/t ($538/t)
All prices are ex-mill, including VAT.
Outlook
The steel market is sluggish due to low steel demand and overall activity is weak. Steel prices are likely to stay stuck within a specific range in the short term. However, it is important to watch how government policies and overall market confidence change, as these may have an outsized impact. On the export front, the Chinese currency is weakening which is making it cheaper for other countries to buy Chinese steel.
Leave a Reply