China weekly: Steel prices decline amid Qingming festival; futures plunge

Chinese steel prices across all products fell this week amid the Qingming festival in China. In addition, the Shanghai Futures Exchange (SHFE) futures (May 2023 contract) plunged w-o-w.

Product-wise sentiments

1. China spot iron ore prices drop w-o-w: Chinese spot iron ore fines Fe62% prices stood at $119.6/t CNF China on 6 April 2023, moving down by $8.4/t w-o-w, against $129.95/t CNF China in the previous week. Iron ore spot prices in China decreased w-o-w owing to weak buying amid the Qingming holiday in China. Sources said that the benchmark iron ore price declined due to rains in multiple Chinese cities, which impacted steel demand.

Meanwhile, the fundamentals of iron ore production and demand remained unchanged. The Chinese steel demand decline affected iron ore confidence in the market.

According to SteelHome data, iron ore inventory at major Chinese ports stood at 134.5 million tonnes (mnt) on 6 April, 2023, which decreased by 2.4 mnt from 137.9 mnt in the previous week.

a) Spot pellet premium stable w-o-w: Spot pellet premium for Fe 65% grade pellets was assessed at $18.7/t, and remained largely stable compared to $18.8/t last week.

b) Spot lump premium increases w-o-w: The spot lump premium stood at $0.1550/dmtu, up by 0.0245 as against $0.1305/dmtu last week.

2. Coking coal prices drop: Coking coal prices dropped by $18/t w-o-w to $292/t FOB from $310/t FOB amid selling pressure. Moreover, there was no improvement in demand as Chinese and Indian buyers were booking small parcels only when needed.

3. Chinese billet prices decline amid weak market sentiments: Billet prices in China's Tangshan fell w-o-w by RMB 80/t ($12/t) to RMB 3,800/t ($553/t), including 13% VAT, on 6 April. Falling rebar futures and finished steel prices have weighed on billet prices. According to data maintained with SteelMint, China's SHFE rebar futures contract for May 2023 delivery closed at RMB 3,938/t ($573/t) on 6 April, a sharp decrease of RMB 229/t ($33/t), w-o-w.

4. HRC export offers drop: China's HRC export offers dropped by $5/t w-o-w to $680/t FOB Rizhao against $685/t a week ago. The volatile SHFE HRC futures and the Qingming festival on 5 April 2023 had kept offers under pressure.

Domestic HRC prices plunged by RMB 90/t ($13/t) w-o-w to RMB 4,110/t ($598/t) against RMB 4,200/t ($612/t) in the preceding week. This is due to the sharp decline in SHFE HRC futures which plunged by $242/t w-o-w to 4,027/t on 6 April 2023.

5. Domestic rebar prices fall: Chinese rebar prices fell by RMB 70/t to RMB 4,110/t ($/t) as against RMB 4,180/t ($/t) last week. Prices dropped amid sharp decrease in China's SHFE rebar futures contract for May 2023.

6. China's Shagang Steel roll over long steel prices: Shagang Steel rolled over long steel prices for early-April'23 sales. Effective prices-

• Rebars (16-25 mm): RMB 4,450/t ($647/t)
  
  
• Wire rods (6-10 mm): RMB 4,560/t ($663/t)
  
  
• Coiled rebars (8-10 mm): RMB 4,700/t ($683/t)
  
  
• All prices are ex-mill, including VAT.