China: Billet prices fall as weak domestic demand offsets firm export offers

• Weak real estate demand continues to weigh on consumption
• Elevated raw material costs, low inventories limit further downside

Chinese billet prices declined by RMB 10/t ($1) d-o-d to RMB 2,930/t ($439) from RMB 2,940/t ($440), amid weak domestic demand. Potential capacity cuts and low inventories provided some support to domestic steel prices, despite sluggish end-user demand.

Chinese steel prices weakened on 22 Oct as concerns over sluggish demand pushed commodity markets lower. Domestic steel prices fell by RMB 10-30/t, despite inventory declining by around 320,000 tonnes. Rebar prices eased to RMB 3,059/t ($458), reflecting continued weakness in the property and construction sectors. Steel output continued to decline gradually, while mills stepped up maintenance in October and early November to manage costs and supply.

Export market conditions also softened, with offers declining by $2-3/t and some exporters withdrawing offers. The domestic billet index fell by RMB 20/t, while the steel export index dropped by $2/t. Raw material sentiment weakened sharply, with 62% Fe iron ore prices falling by $90/t, while coke suppliers struggled to secure mill support for the proposed first price increase. Overall, weak demand and falling prices kept the October steel market under pressure despite production cuts and inventory reductions.