HRC Prices Fluctuate Widely

SHANGHAI, Feb 13 (SMM) - Iron ore

Prices of leading iron ore futures rebounded after falling last Friday and the most-traded 2305 contract finally closed at 863.5 yuan/mt, an increase of 0.76%. Traders were less enthusiastic about shipments and steel mills were wait-and-see, hence the transactions were poor. The transaction prices of PB fines in Shandong were mainly 868-876 yuan/mt, flat from the previous trading day, while the PB fines in Tangshan were sold at 875 -879 yuan/mt, down 3 yuan/mt from the previous trading day.

Iron ore inventories across 35 ports tracked by SMM totalled 136.09 million mt as of February 10, a gain of 780,000 mt from a week ago, but down 17.98 million mt year-on-year. The daily average shipment rose 423,000 mt on a weekly basis to 2.95 million mt last week. Driven by the slight increase in demand for finished products last week, the iron ore trading picked up and the port shipments recovered significantly. The supply of iron ore was weak while the demand was strong. However, the steel mills still suffered losses and the demand for iron ore was average.

On February 10, the transaction prices of first-grade metallurgical CQD in Luliang, Shanxi were 2,890 yuan/mt (ex-factory), flat from the previous day.

Coking coal and coal

 The output of coal mines has increased, and downstream purchased on demand. In light of increasing coking coal inventory and increasing failed online auctions, the prices of some coal types declined. But the operating rates remained stable as some coke companies were still in a state of loss. The downstream enterprises were wait-and-see, hence the shipments of coke companies slowed down. Steel mills stopped restocking and controlled the arrival of coke as their coke stocks were sufficient and their sales did not improved. On the whole, the coke inventory of steel mills increased and the demand for coke declined, which slowed down the shipments. It is expected that the coke market may run weakly and stably in the short term.

Steel scrap

Last week, prices of steel scrap fluctuated wildly, and the purchase price from domestic steel mills rose 0-160 yuan/mt.

On the demand side, the steel scrap stored by steel mills before the CNY holiday was lower than in the same period in previous years, which boosted the restocking demand from steel mills post CNY. On the supply side, the production of steel scrap recycling and processing enterprises has not yet fully recovered, and these companies were less willing to ship, which forced the steel mills to raise their purchase prices.

Rebar

Last Friday, the rebar futures prices rallied from lows. In the early trading, the prices fluctuated with some declines. At the noon trading, the prices extended the decrease. And the market players mainly engaged in shipments.

In terms of inventory, the total domestic construction steel inventory continued to accumulate last week, but the growth rate of social inventory slowed down year-on-year. In the later stage, more steel mills resumed production, pushing up the output. The finished product inventories held by steel mills are expected to grow further. The goods stored in plants may be transferred to social warehouses rapidly. Therefore, the total market inventory will continue to rise this week and next week, but the accumulation speed may not change much compared with the same period last year. On the demand side, some demand has been released in the early trading last Friday. After the rebar futures prices rose in late trading, the market demand for speculative purchases improved, but the overall transactions were mediocre.

HRC

HRC futures prices fluctuated within a wide range last Friday and lost 0.19%. Spot transactions in many places weakened, and fluctuations in futures prices once again disturbed downstream sentiment.

Downstream and terminal companies held a strong wait-and-see sentiment. The overall demand was acceptable. Traders in many places reflected that the processing enterprises were willing to purchase low-priced goods, and the transactions of high-priced goods were sluggish. On the supply side, HRC output rose slightly WoW last week with more steel mills resuming production from maintenance. On the demand side, last week, some mainstream market demand was gradually released, pushing up the trading volume. In February, according to SMM survey, the planned HRC output across 39 mainstream HRC steel mills totals 13.69 million mt, and the daily average output rises slightly compared to January. Recently, the HRC export window has opened again, which may support the HRC prices to a certain extent in the short term.