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Asian steel, scrap face challenges in Q1 on thin demand, trade tensions

This report is part of the S&P Global Commodity Insights’ Metals Trade Review series, where we dig through datasets and digest some of the key trends in iron ore, metallurgical coal, copper, alumina, cobalt, lithium, nickel and steel and scrap. We also explore what the next few months could bring, from supply and demand shifts to new arbitrages, and to quality spread fluctuations.

The Asian steel market entered the first quarter of 2025 facing headwinds amid heightened trade tensions, tariffs threats and protectionist safeguards that could take effect, ending 2024 on a weak note with concerns of demand carrying over into the new year.

Market participants continue to monitor potential Chinese stimulus policies and further export opportunities as they prepare ahead of evolving trade policies.

Market sources also pointed to opacity in steel market trends in the near term, citing the need for a wait-and-see approach in determining any impact the incoming Donald Trump administration in the US might have on China’s steel demand.

Chinese HRC exports likely to retreat in Q1 amid antidumping duties
Asian hot-rolled coil prices are expected to remain rangebound in Q1, with the Chinese economy weighing on steel demand and concerns about looming US tariffs on Chinese manufactured good exports.

Following stimulus measures by Chinese policymakers in September, Platts assessed Chinese mills’ HRC production margins rising to a 16-month high at $34.33/mt in October 2024, but the policy-driven frenzy lost reaction soon and saw margins retreating to negative territory, ending December with losses of $24.55/mt, S&P Global Commodity Insights data showed.

Platts assessed HRC SS400 FOB China prices down $97/mt or 17% year over year at $471/mt Dec. 31, with prices reaching a four-year-low of $436/mt Sept. 9, prior to Chinese stimulus announcement.

While export prices continued to slip entering 2025, recent HRC production margins in China stabilized on more scheduled maintenance plans by mills in Q4 and waning coking coal prices since October 2024.

Chinese HRC export volumes are expected to remain elevated amid weak domestic demand, though export quantities may retreat in Q1 due to antidumping duties from key export destinations such as India and Vietnam.

“China’s exports of steel and manufactured goods are expected to remain strong in the first half of 2025, but uncertainty around global trade might impact results in the second half of the year,” said Paul Bartholomew, S&P Global Commodity Insights senior analyst for metals and mining.

The Middle East may turn into a major export destination for Chinese flat steel, but competition is anticipated from producers in India, Japan and South Korea.

Meanwhile, demand remains slow in the Indian steel market amid surplus inventory in the pipeline and stagnant exports. Market participants also await developments after India launched a safeguard investigation on non-alloy and alloy steel flat products imports in mid-December.

Despite a bearish price outlook, the market is hopeful that the upcoming Indian federal budget Feb. 1 may increase government spending on infrastructure.

Southeast Asian longs market stagnates, overseas buyers retreat
Southeast Asia’s billet trading activity dwindled toward end-2024, with the volume of heards received for concluded deals and bids for cargoes sold in Asia falling from 136 in Q4 2023 to 35 in Q4 2024, while recorded offers only fell from 319 to 281 over the same period, according to data from Commodity Insights.

Early January saw quiet transaction activity despite Chinese and Indonesian mills holding firm on their offers, after securing February shipment orders.

However, market participants are unsure on how long such demand would sustain. While some anticipate a rebound in production as Chinese mills resume operations after maintenance, any increase in hot metal output is expected to be allocated toward flat products, like HRC, on more favorable production margins.

With construction activity weak in Southeast Asia, mills from China and neighboring regions have begun exploring buyers outside their usual markets.

An Indonesia-based mill was heard to have recently concluded billet deals toward Egypt and South America at $435-$437/mt FOB base for February shipment, while the orders booked by Manila buyers were heard only at $445/mt CFR for March shipment 5SP cargoes in early January, $15-$20/mt lower than the prices to other regions on an FOB basis.

Asian-origin billets have seen diminishing interest from Turkish buyers, who find imports from Asia not priced competitively enough to mitigate market volatility. The price spread between CFR Southeast Asia billet and CFR Turkey scrap has widened significantly, increasing from $85-$90/mt in early September 2024 to approximately $120/mt by January, Commodity Insights data showed.

Turkish long steel rerolling mills view scrap as a more cost-effective and lower-risk alternative to billet, even though Turkish scrap prices remain higher than those in Taiwan.
Moreover, Turkish buyers are facing growing pressure with European demand falling in Q4. The price spread between CIF Antwerp HRC and ex-stock Shanghai prices contracted from $200/mt in early September 2024 to around $80/mt in early 2025, Commodity Insights data showed, signaling a weaker European demand, even as Chinese prices fell sharply in Q4.

Ferrous scrap prices continue to face pressure in Q1
Asian ferrous scrap prices experienced a steep plunge in Q4 amid competitive billet prices and high inventory levels.

The Platts containerized HMS ½ 80:20 CFR Taiwan index fell from $331/mt Oct. 17 to $284/mt Dec. 26, as market participants navigated through a challenging economic landscape and slow activity towards the year-end festive season.

Competitive seaborn billet offers were heard continuing to weigh on scrap prices, with Russian-origin billet offers heard at $445/mt CFR Taiwan in the week ended Jan. 9.

While Taiwanese scrap prices saw support in January from restocking activity ahead of Lunar New Year holidays and rising Turkish scrap price trends, market sources noted many buyers might continue monitoring from the sidelines in the near term.

Despite January’s Kanto H2 grade scrap tender rising Jan. 10 for the first time after two months of decline, the elevated price was heard to have a limited impact on Vietnamese spot price outlook, considering the current surplus of sellers compared to fewer buyers before the Tet holidays.

Amid continued sluggish scrap and steel demand seen in South Korea, some mills were heard looking toward export opportunities for rebar, with South Korean rebar offers heard at $480/mt CFR Singapore in the week to Jan. 9.

Finally, market sources were heard eyeing Indian and Bangladesh as potential destinations for reemerging scrap demand in Q1 in the near term, amid thin activity in Southeast Asian seaborne markets in early January.
Source: Platts

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