The latest weekly analysis from Nisshin Shinkansen, a well-known spot trading platform, highlights a mixed trend in the steel and raw material markets. On September 6th, it was reported that domestic prices for billet, scrap, and imported iron ore saw slight declines this week, while coal and coke prices continued to rise. Domestic iron ore prices remained relatively stable, though imported iron ore prices dipped slightly.
As of Friday, the procurement price for 66% Fe fine powder at Tangshan Steel Plant in Hebei Province stayed around 1,070 yuan/ton. Meanwhile, the plant’s output increased by 100,000 tons, reaching 6.15 million tons. Domestic mine production, however, decreased by 100,000 tons to 400,000 tons. In Liaoning, the price of 66% Fe fine powder dropped by 10 yuan to 980 yuan/ton.
Looking at raw materials, domestic coke prices saw a modest increase. The price of secondary metallurgical coke (A: 13.5%) in Shanxi rose to approximately 1,140 yuan/ton, while primary metallurgical coke (A: 12.5%) reached 1,260 yuan/ton. In Hebei and Liaoning, primary coke prices climbed to between 1,410 and 1,430 yuan/ton, up 30 yuan/ton. Inventory levels among the top 10 steel mills in Tangshan remained at 550,000 tons.
This week, the coal market experienced broad-based gains. Shanxi Coking Coal Group raised main coking coal prices by 20 yuan, with Tunlan coal reaching 1,080–1,130 yuan/ton (railway). Hebei Kaiyuan Group also increased its main coking coal prices by 5 yuan to 1,045 yuan/ton. Similarly, Henan Pingdingshan Coal Coking Group and Heilongjiang Longco Coal Group both raised their main coking coal prices by 30 yuan, reaching 1,120 and 1,300 yuan/ton respectively.
Although coal and coke prices have risen, pressure on steelmakers is increasing. Analysts expect a steady rise in the coke market over the next week, while coking coal prices are likely to stabilize temporarily.
Due to higher coke prices, the production costs for domestic steel mills rose again this week. For steel mills with an annual capacity of over 10 million tons, rebar production costs reached about 3,661 yuan/ton, up 13 yuan/ton from last week. For mid-sized mills (5–10 million tons), the cost was approximately 3,569 yuan/ton, up 14 yuan/ton. Small mills with under 5 million tons of annual capacity saw costs rise to 3,485 yuan/ton, up 14 yuan/ton. Meanwhile, the average price of third-grade rebar in the domestic market fell to 3,627 yuan/ton, down 26 yuan/ton from the previous week, reflecting the cost of materials from two weeks ago. As a result, many small and medium-sized steel mills remain in a low-profit state.
In terms of inventory, as steel prices declined, large and medium-sized mills became less eager to purchase iron ore and scrap, leading to stable stock levels. However, some mills continued to raise prices due to early-stage inventory shortages, keeping stocks stable and even slightly rising.
Starting from August 30th, China will implement a 3% MFN tax rate on lignite imports. Currently, lignite accounts for about 20% of China's coal imports, and the average import price has been around $52 per ton since 2013. This tax increase is expected to add approximately 10 yuan/ton to the cost of coal, potentially limiting the growth of coal imports.
Iron ore shipments from Brazil and Australia increased by 4.94% and 9%, respectively, in August. According to Nisshin Shinkansen, major mining companies such as Rio Tinto, BHP Billiton, and Vale have been conducting frequent tenders, most of which are scheduled for mid-September. It is expected that iron ore shipments into China will see a significant increase in October. Additionally, Rio Tinto recently successfully shipped its first batch of iron ore from its newly expanded facilities in Western Australia, signaling an anticipated rise in supply and potential pressure on the iron ore market.
Despite the traditional “golden September, silver October†period, after nearly one and a half months of recovery, the contradictions of overcapacity and tight funding in the steel market have become more apparent. Price increases have been weak, and the market is gradually entering a phase of uncertainty. As a result, steel buyers are becoming more cautious, focusing on maintaining existing inventory. Imports of key materials like iron ore, steel billets, and scrap may face slight adjustments. While current coal and coke prices are still relatively low, they are expected to continue rising steadily in the short term.
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