- Coking coal inches up, but oversupply may cap gains
- Spot iron prices dip $2/t w-o-w amid oversupply
China’s steel market witnessed a downtrend this week, influenced by falling SHFE futures. Notably, prices of hot-rolled coils (HRCs), billets, iron ore and rebar decreased w-o-w amid subdued demand. However, prices of coking coal inched up from the previous week.
1.Iron ore spot prices decline w-o-w: The benchmark price for iron ore fines (Fe 62%) dropped by $2.15/t w-o-w to $96.8/t CFR China on 30 May. The decline in prices is attributed to subdued demand amid elevated production levels, prompting mills to adjust their input mix to protect margins. However, mid-grade fines continued to see some preference from buyers amid the positive margins for mills.
Iron ore inventories at major Chinese ports fell by 1.4 mnt w-o-w to 133 mnt on 29 May, according to data published by SteelHome.
a) Spot pellet premium hold firm w-o-w: Spot pellet premium for Fe 65% grade pellet remained unchanged w-o-w at $11.80/t CFR China on 29 May.
b) Spot lump premium stable: Spot lump premium largely stable w-o-w at $0.1540/dmtu on 30 May.
2. Coking coal prices rise w-o-w: Australian premium hard coking coal (PHCC) prices rose $5/t to $196/t FOB, but further declines are expected. In China, met coke prices dropped RMB 100-110/t ($14-15) in May due to weak demand and high inventories, prompting steel mills to cut prices by up to RMB 55/t ($8). Producers plan output cuts to address oversupply.
3. Billets drop by RMB 60/t ($8/t) w-o-w: Steel billet prices in Tangshan, China, declined notably by RMB 60/t ($8/t) w-o-w to RMB 2,890/t ($401/t), including 13% VAT, on 30 May compared to 23 May. The market saw a significant downturn in billet prices, erasing the slight gains made in previous weeks, due to lacklustre demand, easing raw material costs, and high production levels. Meanwhile, SHFE rebar futures also fell by RMB 85/t ($12/t) w-o-w, reaching RMB 2,961/t ($411/t).
4. Domestic HRC prices decline w-o-w: Chinese HRC offers declined by RMB 70/t ($10/t) to RMB 3,100/t ($431/t) from RMB 3,170/t ($440/t) a week ago, following the downtrend in SHFE futures. SHFE HRC futures decreased by RMB 119/t ($17/t) to RMB 3,084/t ($428/t) on 30 May against RMB 3,203/t ($445/t) on 23 May. This decline is attributed to subdued end-user demand.
Moreover, China’s HRC export offers stayed firm w-o-w at $455/t . This is because many overseas buyers have either paused purchases at the end of the month or are offering prices that are too low for Chinese sellers to accept.
5. Domestic rebar prices fall w-o-w: China’s rebar offers slightly went down by RMB 80/t ($11/t) w-o-w to RMB 3,160/t ($439/t) from RMB 3,240/t ($450/t) last week. Moreover, SHFE rebar futures (October 2025 contract) stood at RMB 2,963/t ($412/t) on 30 May, up by RMB 92/t ($13/t) from 3,055/t ($424/t) as of 23 May. Additionally, this fall is due to weak demand from heavy rains and declining futures.
Outlook
China’s steel market may see short-term price support, driven by restocking activity ahead of the Dragon Boat Festival (May 31-June 2). However, steel prices may face continued pressure if demand remains sluggish, inventories stay high and export interest does not improve.
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