Forecast for Next Week: Ferrous Metals May Continue to Fluctuate at Highs in the Short Term
This week, ferrous metals retreated after a rapid rise. At the start of the week, the market said Asia had shifted to coal-fired power generation due to a natural gas supply deficit, while Indonesia would increase coal production and impose export taxes. The rise in international coal prices was transmitted to China, with coking coal and coke leading the gains in ferrous metals; mid-week, the Middle East situation remained volatile, and the US and Iran held differing attitudes toward war, leaving ferrous metals consolidating at highs; the pullback in the second half of the week was also mainly due to weakening cost-side logic, as market rumors said long-term contract negotiations for iron ore had been completed, expectations for tighter iron ore supply declined, and raw materials turned into the main driver of the pullback. In the spot market, speculative activity and end-use purchase sentiment improved in the first half of the week, while the second half remained mainly driven by rigid demand, with the spot-futures price spread widening somewhat. In the short term, according to SMM survey tracking, this week’s daily average hot metal output rose 15,000 mt WoW. Follow-up maintenance continued to shift into production resumptions, while disruptions on the iron ore and coking coal and coke side still persisted, so support from the raw material side may still remain in the short term; for steel products, end-use demand continued to recover, and inventories of the five major steel products kept declining. Overall, both supply and demand for finished steel increased, fundamentals remained in a weak balance, and the short-term trading logic still lay in raw materials. Ferrous metals may continue the trend of fluctuating at highs, though caution is needed against market disruptions caused by raw material rumors.
Iron Ore: Multiple News Factors Resonated to Trigger High Volatility, with Prices Still More Likely to Rise Than Fall in the Short Term
This week, iron ore prices showed a pattern of retreating after a rapid rise, mainly due to disruptions from news factors. Looking ahead to next week, from a fundamental perspective, on the supply side, global iron ore shipments are expected to decline due to cyclone weather in Australia; on the demand side, supported by the continued advance of blast furnace production resumptions, hot metal production is expected to keep increasing, and overall demand for iron ore will likely remain stable with a mild increase. However, uncertainty risks still remain. If the Middle East conflict eases, energy prices may pull back significantly, which would in turn drive down ocean freight rates and weaken cost support for ore prices; in addition, if long-term contract negotiations are finalized and medium-grade resources are released in a concentrated manner, this may also weigh on ore prices. Provided the above risk factors do not materially occur, ore prices will still have the momentum to rebound again and challenge new highs.
Coke: Cost Support Continued to Strengthen, and the Planned Increase May Be Implemented Next Week
On the news front, some steel mills planned to raise prices for wet-quenched coke by 50 yuan/mt and for coke dry quenching coke by 55 yuan/mt, effective from 00:00 on April 1, 2026. In terms of supply, coke producers currently had relatively good shipments, and coke inventory remained at a low level. Meanwhile, coking costs had increased significantly, further strengthening coke producers’ willingness to raise prices. On the demand side, steel sales improved somewhat, and steel mills were in the stage of resuming work and production, with hot metal output trending upward, boosting their willingness to purchase coke. Coking coal side, mainstream coal mines maintained normal production. Recently, coking coal prices stabilized and rebounded, market sentiment improved markedly, and online auction trading volume increased. Some downstream coke and steel enterprises actively purchased, coal mines had solid presale orders, and sentiment was optimistic. Coking coal prices may continue to hold up well next week. In summary, the first round of coke price increase may be implemented next week, and the coke market may hold up well in the short term.
Steel scrap: Fundamentals Maintained a Weak Balance, and Prices May Maintain a Fluctuating Trend Next Week
Supply side, as the weather warmed and processing enterprises resumed work, steel scrap output increased somewhat WoW. Demand side, some EAF steel mills still resumed production as planned this week, and the operating rate of electric furnace mills continued to rise, lifting steel scrap demand. This week, the operating rate of 50 electric furnace steel mills mainly producing construction materials nationwide was 40.42%, up 1.78% WoW. However, the current price trend in the end-user finished steel market remained weak, squeezing the profit margins of electric furnace steel mills. Enterprise operating performance was mediocre, and most adopted strict controls on steel scrap purchase prices to reduce raw material costs and protect production profits. Overall, both supply and demand for steel scrap increased this week, and the overall fundamental pattern maintained a weak balance. Steel scrap prices are expected to fluctuate rangebound next week.
Rebar: Limited Supply-Demand Imbalance, but Market Sentiment Was Relatively Pessimistic
Rebar prices fluctuated in the doldrums this week, with the nationwide average price at 3,145 yuan/mt, down 9 yuan/mt WoW. Supply side, blast furnace mills that had undergone maintenance earlier resumed production this week, with hot metal flowing to wire rod production lines. In addition, electric furnace mills still resumed work this week, and overall construction steel production continued to edge up. Considering that steel mill profitability has recently been squeezed, the pace of proactive output increases may slow down later. Demand side, end-user construction sites recently mostly purchased on demand. Demand in some northern markets continued to improve, but overall demand still lagged the same period last year. Inventory side, both mill inventory and social inventory declined this week, but the destocking speed fell short of market expectations, and attention will remain on the destocking slope next week. Market sentiment has now shifted, with weak demand performance in some regions. Most traders preferred to lock in profits and remained cautious and wait-and-see on the short-term trend. Looking ahead, there were many disturbances from macro news outside China, causing relatively large swings in the raw material side, but providing weak support for finished steel. Finished steel was even in a state of following declines but not gains. At present, rebar's supply-demand imbalance was not prominent, but demand has yet to show any notable improvement. If inventory continues to destock slowly, some regional traders may cut prices aggressively to clear cargoes. Spot prices are expected to remain in the doldrums in the short term.
HRC: Tepid Demand, with Prices Expected to Continue Sideways Movement Next Week
HRC futures fluctuated weakly today, down 0.27% for the day, with the most-traded contract closing at 3,299. This week, futures rose first and then weakened. In the spot market, weekly prices fluctuated up and down by 10-20 yuan/mt, with average transactions. During the week, news was mostly centered on iron ore negotiations. Under bearish market expectations, ore prices weakened accordingly, while coking coal and coke futures also retreated after rapid rise due to crude oil fluctuations. Returning to hot-rolled coil supply and demand, production fluctuated rangebound this week, while downstream demand remained lukewarm, with low purchase willingness for hot-rolled coil, cold-rolled coil, galvanizing products, and other materials. According to SMM data, total hot-rolled coil inventory stood at 6.7821 million mt this week, down 89,100 mt WoW; social inventory as a whole remained in a destocking trend, but by region, apart from continued inventory declines in South China and North China, inventories in other markets all increased; traders maintained a moderate purchase pace, and mill inventory shifted from growth to decline. Looking ahead, hot-rolled coil's own inventory pressure remained relatively high compared with the same period in previous years, and fundamentals were unlikely to show any bright spots. It is expected to continue moving sideways next week, following the cost side.
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