- HRC, billet tags drop by $3-4/t w-o-w
- Shagang Steel trims long steel prices
The Chinese steel market faced significant challenges this week, evidenced by recent price declines on the Shanghai Futures Exchange for hot-rolled coils (HRCs) and billets. This downturn was driven by escalating international trade barriers, including tightening EU import quotas in April, and India’s impending 12% safeguard duty, which are expected to reduce export opportunities. Simultaneously, domestic demand remained weak due to a struggling property sector, characterised by falling property investment, and a slowdown in construction, fostering a cautious market sentiment. Adding to the downward pressure, raw material costs also decreased, with spot iron ore and coking coal prices experiencing declines.
The China Iron and Steel Association (CISA) revealed that the total steel inventory at key Chinese enterprises stood at 16.24 million tonnes (mnt) in early-March 2025. Inventory levels decreased by 70,000 tonnes (t ) or 2.5% against 16.31 mnt in late-February 2025.
1. Iron ore spot prices fall by $4/t w-o-w: The benchmark iron ore fines price decreased by $4/t w-o-w to $101/t CFR China on 21 March 2025 due to weak macroeconomic indicators and sluggish market fundamentals. Seaborne cargo prices declined, as hot metal production failed to meet seasonal demand expectations. Although most steel mills remain profitable, a substantial increase in production appears unlikely, adding to market uncertainty.
a) Spot pellet premium falls w-o-w: The spot pellet premium for Fe 65% grade pellets decreased by $0.5/t w-o-w to $13.10/t CFR China on 19 March.
b) Spot lump premium inches up w-o-w: The spot lump premium edged up by $0.0015/t to $0.1475/t on 21 March.
2. Coking coal prices plunge w-o-w: Australian coking coal prices dropped by $12/t w-o-w, with PHCC assessed at $166/t FOB Australia, driven by improved spot supplies, a slight decrease in demand, and bid-offer disparities.
3. Chinese billet prices drop by RMB 30/t ($4/t) w-o-w: Billet prices in China’s Tangshan fell by RMB 30/t ($4/t) w-o-w to RMB 3,040/t ($419/t), including 13% VAT, on 21 March 2025 against 14 March. Prices faced downward pressure due to limited buying activity, weak sentiment in the finished steel market, and a sharp decline in rebar futures. Meanwhile, SHFE rebar futures (May 2025 delivery) dropped sharply by RMB 111/t ($15/t) to 3,156/t ($435/t) on 21 March against 14 March 2025.
4. Domestic HRC prices drop w-o-w: Chinese HRC offers edged down by RMB 20/t ($3/t) w-o-w to RMB 3,330/t ($459/t) against RMB 3,350/t ($462/t) a week ago. This decline is attributed to weaker-than-expected seasonal demand and the ongoing instability within the Chinese property sector continued to exert downward pressure on steel prices. SHFE HRC futures (May 2025 contract) dropped by RMB 73/t ($10/t) w-o-w to RMB 3,353/t ($463/t) as compared to RMB 3,426/t ($473/t) in the previous week. China’s HRC export offers remained unchanged w-o-w at $465/t.
5. Domestic rebar prices decline w-o-w: China’s rebar offers inched down by RMB 20/t ($3/t) w-o-w to RMB 3,290/t ($454/t) from RMB 3,310/t ($457/t) last week. However, SHFE rebar futures (May 2025 contract) stood at RMB 3,465/t ($478/t) for the week, up by RMB 208/t ($29/t) w-o-w from RMB 3,257/t ($449/t) a week ago.
China’s Shagang Steel reduced its long steel product prices for late-March 2025 sales. Prices of rebars, coiled rebars, and wire rods were reduced by RMB 50/t ($7/t). Effective prices are as follows:
- Rebars (16-25 mm): RMB 3,400/t ($469/t)
- Coiled rebars (8-10 mm): RMB 3,510/t ($484/t)
- Wire rods (6-10 mm): RMB 3,420/t ($472/t)
Outlook
China’s steel market is poised for continued weakness in the short term, driven by a growing supply-demand imbalance, as mills keep production high despite sluggish demand. While declining raw material costs are reducing production costs, the market surplus is expected to worsen. Nevertheless, steel export prices are likely to remain stable, underpinned by Chinese mills’ focus on domestic sales and a relatively firm yuan.
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