China weekly: steel prices show mix trends post Lunar New Year holidays

• Inventories rise sharply by 20%, limiting further upside potential
  
  
• Falling coking coal prices ease overall steel cost pressure
  
  

Chinese steel prices showing uptrend after holidays, trading in the ferrous metals segment remained volatile, with rebar and hot-rolled coil futures settling marginally higher, while iron ore, coking coal, and coke futures edged slightly up by the close.

The China Iron and Steel Association (CISA) has reported that total steel inventory at key Chinese enterprises stood at 18.12 million tonnes (mnt) in mid-February 2026 (11-20 February), up by 3.01 mnt or 19.9% compared to 15.11 mnt in early-February. Moreover, on m-o-m basis, inventory levels increased by 1.99 mnt or 12.3% m-o-m from 16.13 mnt in mid-January 2026. Furthermore, inventory level rose by 1.39 mnt or 8.3% y-o-y against 16.73 mnt an year ago.

1. Iron ore spot prices rebound w-o-w: Iron ore fines benchmark prices for Fe 61% increased by $4/t w-o-w to $100/dmt CFR China on 27 Feb'26. Movement was supported by firm restocking demand and favourable import margins. Trading activity remained active as China tightened sintering controls ahead of the upcoming sessions. Meanwhile, portside iron ore prices remained rangebound with limited trades despite strong seaborne arrivals.

a) Spot pellet premium dips w-o-w: Spot pellet premium for Fe 65% grade pellet fell slightly by $0.1/t to $16.25/t CFR China on 25 February.

b) Spot lump premium recovers high w-o-w: Spot lump premium rose by $0.075/dmtu w-o-w to $0.145/dmtu on 27 February.

2. Coking coal weakens on cautious demand, improved supply: China's coke post-holiday production gradually resumed, but downstream steel demand stayed cautious, keeping trading activity thin and sentiment slightly weak.

Meanwhile, Australian premium hard coking coal (PHCC) prices declined by $6/t to $237/t FOB amid improved supply and muted seaborne enquiries. BigMint's PHCC index for Paradip, India, fell by $10/t to $250/t on 27 February 2026, reflecting lower bids and cautious procurement by Indian mills expecting further correction.

3. Billet prices rise w-o-w as policy optimism and firmer costs offset demand weakness: Chinese billet prices increased RMB 30/t ($4/t) to RMB 2,910/t ($424) on 27 February 2026, compared with RMB 2,880/t ($420/t) on 24 February after CNY holiday, marking a recovery after early-week weakness.

Prices initially declined as mills resumed operations post-holiday, pressuring finished steel values amid tightening margins and cautious buying.

Midweek, billet rebounded on improved export bids and firmer coke costs, while supportive housing policies in Shanghai and expectations of mid-March production controls lifted market sentiment. However, gains were limited later in the week as rising steel inventories and slow domestic demand capped further upside.

By 26-27 February, prices stabilised, supported by steady iron ore costs and positive policy expectations ahead of the March Two Sessions. The appreciation of the RMB below 6.83 against the dollar also restrained aggressive export pricing, with mills focusing on currency risk management.

Overall, cost support and policy optimism balanced weak demand, keeping billet broadly stable.

4. Domestic HRC prices increase w-o-w: Domestic HRC prices in China rose by RMB 20/t ($3/t) after the Lunar New Year holidays to RMB 3,060/t ($446/t) on 27 February, up from RMB 3,040/t ($443/t) on 13 February, following the increase on SHFE futures (May 2026 contract), which up by RMB 15/t ($2/t) w-o-w to RMB 3,208/t ($468/t) on 27 February, compared with RMB 3,223/t ($470/t) on 13 February before holidays. Meanwhile, China's HRC export remained stable w-o-w at around $465/t FOB.

However, HRC started the session on a positive note, moving differently from the weakness seen in raw materials, reflecting a cautious optimism in the market despite mixed signals from the broader steel sector.

5. Rebar prices inch up w-o-w: China's rebar prices marginally up by RMB 10/t ($1/) to RMB 3,100/t ($452/t) on 27 February from RMB 3,110/t ($453/t) before holidays. The drop reflected the weakening trend in SHFE futures, with the May 2026 rebar contract falling by RMB 5/t ($1/t) to RMB 3,059/t ($446/t) on 27 February from RMB 3,054/t ($445/t) before holidays.

China's Shagang Steel has continued to keep its long steel prices unchanged for late-Feb'26 sales, with no price revisions announced since 11 Sep'25. Prices of rebars, coiled rebars, and wire rods are as follows:

Rebars (16-25 mm): RMB 3,450/t ($500/t)

Coiled rebars (8-10 mm): RMB 3,560 ($516/t)

Wire rods (6-10 mm): RMB 3,470/t ($503/t)

Outlook

The Chinese domestic steel market is expected to remain slow in the coming week. While proactive macroeconomic policies and real estate stabilization efforts support market sentiment, the fundamental outlook remains pressured by a "strong supply, weak demand" imbalance.

As steel mill capacity releases accelerate, end-user demand has yet to fully recover from the holiday lull. With cost support from iron ore and coking coal also softening, any short-term rebounds triggered by upcoming policy meetings are likely to be limited by high volatility and cautious trading activity.