- Spot iron ore prices fall $5/t w-o-w on weak fundamentals
- Australian coking coal dips $1/t amid bid-offer disparities
China’s steel market displayed a bearish trend this week, with Shanghai Futures Exchange (SHFE) prices trending downward. Notably, domestic prices of hot-rolled coils (HRC) and rebar declined w-o-w, while billet prices also saw a weekly drop. In the raw materials segment, spot iron ore and coking coal prices decreased over the week too.
The China Iron and Steel Association (CISA) revealed that the total steel inventory at key Chinese enterprises stood at 16.73 million tonnes (mnt) in mid-February 2025. Inventory levels increased by 520,000 tonnes (t) or 3.2% m-o-m from 16.21 mnt in early-February 2025.
1. Spot iron ore prices fall $5/t w-o-w: The benchmark iron ore fines price sharply decreased by $5/t w-o-w to $104/t CFR China on 28 February 2025 due to weak fundamentals and bearish sentiment. Mills preferred discounted medium-grade fines. However, steel margins have improved. As per reports, the upcoming US tariffs and low expectations for next week’s meetings pressured overall market sentiment.
a) Spot pellet premium fall w-o-w: Spot pellet premium for Fe65% grade pellet decreased by $1.4/t w-o-w to $14.45/t CFR China on 26 February.
b) Spot lump premium decreases w-o-w: Spot lump premium fell by $0.004/t to $0.1500/dmtu on 28 February.
2. Coking coal prices drop w-o-w: Australian coking coal prices dropped slightly by $1/t w-o-w, with PHCC assessed at $188/t FOB Australia, driven by a slight decrease in demand and bid-offer disparity. This led to a modest price correction as market participants remained cautious.
3. Chinese billet prices fall by RMB 40/t ($5/t) w-o-w: Billet prices in China’s Tangshan fell by RMB 40/t ($5/t) w-o-w to RMB 3,090/t ($424/t), including 13% VAT, on 28 February 2025 against 21 February. The decline in raw material and finished steel prices, coupled with weaker rebar futures and reduced trading activity, have exerted downward pressure on billet prices. Meanwhile, SHFE rebar futures (May 2025 delivery) dipped by RMB 33/t ($5/t) to 3,328/t ($457/t) on 28 February against 21 February 2025.
4. Domestic HRC prices drop: Chinese HRC offers dropped by RMB 40/t ($5/t) w-o-w to RMB 3,360/t ($461/t) against RMB 3,400/t ($467/t) last week, following downward trend in SHFE HRC futures. SHFE HRC futures (May 2025 contract) declined by RMB 62/t ($9/t) w-o-w to RMB 3,412/t ($468/t) as compared to RMB 3,474/t ($477/t) last week. However, China’s HRC export offers rose by $5/t w-o-w to $475/t from $470/t a week ago.
5. Domestic rebar prices decrease w-o-w: China’s rebar offers decreased by RMB 30/t ($4/t) w-o-w to RMB 3,330/t ($457/t) against RMB 3,360/t ($461/t) in the previous week. SHFE rebar futures (May 2025 contract) stood at RMB 3,318/t ($456/t), down by RMB 48/t ($7/t) w-o-w from RMB 3,366/t ($462/t) a week ago. The decline in rebar prices is due to growing concerns about increasing production, decreasing coke prices, and weak demand. Market participants are worried that mills may increase output, exacerbating the oversupply situation and putting further downward pressure on prices.
Outlook
China’s steel market has experienced significant fluctuations this week, but a balanced supply and demand scenario, combined with stable inventory levels, is expected to stabilise the market. The upcoming “Two Sessions” meeting has generated optimism among investors, who anticipate supportive macro-economic policies. Despite uncertainty around production cuts, the market is expected to experience volatility.
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