China weekly: Steel prices show mixed trends w-o-w as raw material costs fluctuate

• Steel output declines amid weak demand conditions
  
  
• Inventories rise despite improving raw material prices
  
  

China's crude steel production stood at 160.34 million tonnes (mnt) in January-February 2026, down 3.6% y-o-y, according to the National Bureau of Statistics (NBS).

The China Iron and Steel Association (CISA) reported that total steel inventory at key mills stood at 17.81 mnt in early-March 2026 (1-10 March), rising by 470,000 t or 2.7% compared with 17.34 mnt in late-February.

Additionally, inventories increased by 2.7 mnt or 17.9% m-o-m from 15.11 mnt in early-February, and on a yearly basis increased by 1.57 mnt or 9.7% compared with 16.24 mnt in early-March 2025.

1. Iron ore spot prices edge up w-o-w: Iron ore fines benchmark prices for Fe 61% increased by $1/t w-o-w to $110/dmt CFR China on 20 March. Chinese steel futures rose on better downstream demand and improved mill output outlook, supporting sentiment. However, seaborne activity stayed mostly cautious as major miner talks delayed buying, limiting spot deals. Import losses and high portside stocks capped price gains and curbed offer increases.

a) Spot pellet premium stable: Spot pellet premium for Fe 65% grade pellet stood at $17.05/t CFR China on 18 March.

b) Spot lump premium stable w-o-w: Spot lump premium remained largely stable w-o-w at $0.1900/dmtu on 21 March.

2. China coking coal market stable: China's coking coal market remained largely stable, with prices remaining unchanged across key regions amid balanced supply and demand. Stable production at coal mines ensured consistent availability, while a gradual increase in new orders and declining inventories provided underlying support to the spot market.

In the seaborne market, Australian premium hard coking coal (PHCC) prices increased by $5/t to $224/t FOB as of 20 March, supported by firm buying interest and tighter near-term availability. Similarly, BigMint's PHCC index at Paradip rose by $6/t w-o-w to $255/t CNF on 20 March. No deals were reported due to volatility in freight rates.

3. Billet prices soften w-o-w; rebar futures edge up: Chinese billet prices fell by RMB 10/t ($1/t) w-o-w to RMB 2,960/t ($430/t) on 20 March, down from RMB 2,970/t ($431/t) earlier in the week, as higher liquid iron output increased supply and weighed on market sentiment. Although inventories declined slightly, indicating some demand recovery, rising production and cautious downstream buying limited price support.

Raw material costs remained relatively firm, with iron ore prices holding near $110/t for 62% Fe, while coke prices stayed largely stable despite weaker consumption signals.

Export sentiment remained relatively stable, with mills testing higher billet offers around $455-500/t FOB, although trading activity stayed limited amid higher freight costs and subdued demand from the Middle East.

4. Domestic HRC prices remain stable w-o-w: HRC prices in China remained unchanged w-o-w at around RMB 3,120/t ($452/t). Moreover, SHFE HRC futures (May 2026 contract), also remained unaltered w-o-w at around RMB 3,298/t ($477/t) on 20 March. China's HRC export offers increased by $5/t w-o-w to around $480/t from $475/t FOB a week earlier.

HRC inventories trended upwards amid lower demand last week; most manufacturing enterprises are expected to ramp up production to normal levels and replenish HRC stocks. In addition, rising raw material prices could also support HRC prices from the cost side.

5. Rebar prices increase w-o-w: China's rebar prices edged up slightly by RMB 30/t ($4/t) w-o-w to RMB 3,200/t ($463/t) on 20 March from RMB 3,170/t ($459/t) a week earlier. However, the drop did not reflect the decrease in SHFE futures, with the May 2026 rebar contract decreasing by RMB 15/t ($3/t) w-o-w to RMB 3,126/t ($452/t) on 20 March from RMB 3,141 ($455/t) a week ago.

Outlook

China's steel production is expected to remain subdued due to lower exports and demand and rising inventory levels. Meanwhile, participants are in a wait-and-watch mode amid geopolitical tensions which are propelling freight and insurance costs and exporters have been encountering serious disruptions in shipments.