[SMM Steel Morning Meeting Summary] The short-term coke market may be in the doldrums, with the first round of coke price cut expected to be implemented

Imported Ore:

Traders were more active in shipping goods, while steel mills purchased as needed. The market transaction atmosphere was average. The mainstream transaction prices of PB fines in Shandong were around 770-780 yuan/mt, up 10-15 yuan/mt. The transaction prices of PB fines in Tangshan were around 785-790 yuan/mt, up 10-15 yuan/mt. According to the SMM survey, on May 14, the operating rate of blast furnaces at 242 steel mills surveyed by SMM was 88.63%, down 0.33 percentage points WoW. The daily average pig iron production of the sampled steel mills was 2.4403 million mt, down 17,600 mt WoW. Despite expectations of a decline in iron ore demand, the US's non-seasonally adjusted CPI for April, released last night, rose 2.3% YoY, lower than market expectations. This has raised market expectations for RRR cuts and interest rate cuts. Coupled with the impact of an accident involving loading and unloading equipment at a Peruvian port, market speculation sentiment is high, and ore prices are expected to continue to hold up well in the short term.

Domestic Ore:

In west Liaoning, iron ore concentrates prices have slightly increased. The ex-factory price of 66% grade iron ore concentrates on a wet basis, excluding tax, is 710-720 yuan/mt. With the easing of local safety inspections, mines that had previously suspended production have gradually resumed production, slightly alleviating the short-term supply tightness. On the steel mills' side, purchasing as needed remains the main strategy. Recently, there have been rumors in the market about crude steel production restrictions at local steel mills. However, according to SMM's current tracking, the possibility of production restrictions in the short term is low, providing some support for local iron ore concentrates. Coupled with the recent strong trend in the iron ore futures market, it is expected that there will be some upside potential for local iron ore concentrate prices in the short term.

Coking Coal Market:

On the fundamental side, coal mines have maintained a normal production pace, but actual transaction performance has been average, with risks of inventory buildup. Some coal mines have poor subsequent orders, and prices have already started to pull back. Online auctions have seen more declines than increases, and coking coal prices will continue to face downward pressure in the future.

Coke Market:

In terms of supply, coking enterprises have maintained moderate production profits and high operating enthusiasm, keeping coke supply at a high level. However, the shipping pace of some coking enterprises has slowed down, resulting in certain inventory pressure. On the demand side, steel mills' coke inventories are at a medium-to-high level, with weak restocking demand. Additionally, with the arrival of the off-season, the number of blast furnace maintenance is gradually increasing, and some steel mills have slowed down their purchasing pace, mainly purchasing as needed. In summary, the market is beginning to transition into the off-season, with pig iron production basically peaking. Coupled with the relatively high level of coke inventories at steel mills, the coke market may be in the doldrums in the short term, with the first round of price cuts expected to land.

Rebar:

On the supply side, according to the SMM survey, the operating rate of 50 electric furnace steel mills producing building materials nationwide this week was 37.16%, up 0.64 percentage points from the previous period. Currently, the operating conditions of electric furnace mills vary across different regions. In the southwest region, due to electricity subsidies, market efficiency has recovered, and some electric furnace mills have increased their operating hours. In the south China region, due to rainy weather and difficulties in collecting steel scrap, overall efficiency has been poor, and some severely loss-making electric furnace mills have slightly reduced their operating hours. Demand side, as the mid-year peak season nears its end, the incremental space for market demand is limited. Currently, trading volume among real estate enterprises continues to fluctuate at low levels, indicating insufficient demand sustainability. Overall, with the preliminary agreement reached in the Sino-US trade tariff negotiations, market sentiment has improved somewhat. However, the short-term improvement in sentiment may not sustainably stimulate steel price increases. Therefore, it is anticipated that the upside potential for steel prices is limited.

HRC:

In the spot market, quoted prices increased by 20-50 yuan/mt WoW. The futures market strengthened significantly, with a moderately positive trading atmosphere. Trading volume for HRC was good. On the news front, the Ministry of Investment, Trade and Industry (MITI) of Malaysia announced that, starting from the 11th of this month, it would impose anti-dumping duties for a period of five years on tin-plated flat-rolled iron or non-alloy steel products imported from China, India, Japan, and South Korea, with tariff rates ranging from 4.48% to 36.80% to safeguard the interests of local producers. From a fundamental perspective, the impact from maintenance on hot-rolled production this week was 211,000 mt, an increase of 43,300 mt WoW. Next week, the impact from maintenance on hot-rolled production is expected to be 226,200 mt, an increase of 15,200 mt from this week, indicating a decrease in supply pressure. According to the released HRC inventory data from multiple regions, the de-stocking trend continues, but the rate of decline has narrowed. Affected by the off-season, demand is still gradually weakening. Cost side, iron ore provides strong support, while coke is in the doldrums. Overall, it is expected that the upward momentum for HRC prices in the short term will be limited, with price fluctuations expected within the range of 3,220-3,280.