SMM Daily Comments of Ferrous Metals Market

SHANGHAI, Feb 14 (SMM) -

Macro front:

China

The central government announced that it is proposed to do a good job in the key tasks of comprehensively promoting rural revitalisation in 2023

The Central Committee of the Communist Party of China and the State Council: Encourage qualified regions to develop NEVs and green smart home appliances in the countryside

Overseas

The US should immediately lift unilateral sanctions on Syria

The Ministry of Foreign Affairs introduces the purpose and consideration of Wang Yi's visit to Russia: to work with Russia to promote bilateral relations

Raw materials:

Iron ore

Yesterday, iron ore futures fluctuated downward, and the most-traded I2305 contract closed at 841.5 yuan/mt, down 2.21%. The overall transactions were acceptable. Steel mills purchased on rigid demand, pushing up the spot trading. Prices of PB fines in Shandong moved between 855-865 yuan/mt, down 5-17 yuan/mt from last week. Prices of PB fines in Tangshan were 863-873 yuan/mt, down 2-12 yuan/mt from last week.

The overall supply was at the average level of the same period in previous years. The arrivals at Chinese ports increased slightly this week, and are expected to fluctuate narrowly in the later period. On the demand side, more blast furnaces resumed production this week, driving the pig iron output. However, the current iron ore prices are still affected by macro factors and finished product demand to a certain extent. It is expected that iron ore prices will fluctuate in the short term.

Coke

On February 13, the traded price of quasi-first grade metallurgical coke (coke dry quenching) in Lvliang city, Shanxi province was 2,890 yuan/mt (ex-factory), flat from the previous trading day.

Coking coal

The output of coking coal in coal mines has increased. The shipment of some coal types with higher prices was hindered, thus quotations fell. Downstream companies were active in buying some kinds of coals whose prices have been lowered to a reasonable range, and prices of these coals temporarily stabilised.

Coke

On the supply side, coke companies became more willing to produce amid the falling costs. But downstream demand weakened, slowing down the coke companies’ shipments.
On the demand side, the output of pig iron in steel mills has increased, and coke consumption has grown. Recently, some steel mills have restocked their coke stocks in a great amount, but the sales of steel were poor. Therefore, the steel mills have to control the pace of arrival.

Steel scrap

Prices of steel scrap rose yesterday. Some steel mills in East China lowered their prices while some steel mills raised their prices by about 30 yuan/mt.

On the demand side, the pre-holiday stockpiles of steel mills were relatively low, resulting in a strong post-holiday demand. On the supply side, steel scrap recycling and processing enterprises have not yet fully recovered, and were reluctance to sell.

Finished products:

Rebar

The rebar futures fluctuated and declined slightly yesterday. The market lowered the quotations to stimulate transactions.

On the supply side, the capacity utilisation rate has gradually increased. However, due to the losses, EAF steel mills were wait-and-see. Overall, the output of steel mills across the country will further pick up this week. On the demand side, the downstream enterprises were wait-and-see amid the falling prices. Coupled with weak speculative demand, the overall transactions were light.

HRC

HRC futures fell sharply yesterday by 1.42%. In terms of the spot market, due to the weak futures market, the transactions in the spot market weakened again. As such, terminal enterprises were wait-and-see and the market transactions were generally weak.

From the perspective of the demand side, the terminal demand was acceptable, but the transactions were light due to the wide fluctuations in futures prices.