Forecast for next week: Finished steel will remain in a sideways movement in the short term, while raw material trends may diverge
This week, the ferrous metals market moved in different directions. Coking coal and coke extended their strength, iron ore lost some ground, and finished steel moved sideways. At the beginning of the week, rumors about coal mine safety inspections continued to swirl, deepening expectations of supply tightness and driving coking coal to hit its daily limit up. With iron ore’s supply-demand fundamentals staying weak, it gave way to the gains in coking coal and coke, while finished steel edged up in a narrow range. In the second half, data on the five major steel products were released. HRC inventories continued to destock, while construction steel demand showed off-season effects, with the pace of destocking narrowing. Inventory pressure for finished steel as a whole started to build gradually. Coupled with further weakening of iron ore support, the cost-side support from coking coal and coke alone was insufficient to lift finished steel, and finished steel trended weaker in the latter part of the week. In the spot market, HRC spot-futures price spreads narrowed this week but still offered profits compared to earlier. Spot-futures traders in the north continued to destock and take profits. End-users of HRC restocked on a need basis, while construction steel demand exhibited off-season characteristics due to weather.
In the short term, according to SMM survey and tracking, daily average hot metal output this week rose by 2,100 mt WoW. Hot metal production will continue to recover going forward, but given strengthened safety inspections and further shrinking steel mill profits, the incremental gains may fall short of expectations. The sixth round of coke price increase has been initiated, and the seventh round is still under discussion, so the floor cost support from coking coal and coke will remain in the short term. For steel, the off-season impact is deepening, and the supply-demand imbalance for finished steel will continue to build up. Overall, cost trends are somewhat divergent. The one-sided strength in coking coal and coke alone is unlikely to generate strong upward momentum. Moreover, the marginally worsening fundamentals of finished steel also weigh on the market. In the short term, finished steel is likely to remain in a sideways movement. Moving forward, close attention should be paid to the strength of off-season demand and policy developments on the cost side.
Iron ore: Cost support & end-use demand weakening; prices continue to hit bottom
This week, iron ore prices continued to fall, hitting new lows. On the supply side, both global iron ore shipments and port arrivals increased WoW, with the rise in port arrivals particularly pronounced. On the demand side, hot metal output remained basically stable, but against the backdrop of persistently falling prices, steel mills’ purchase willingness weakened, causing port inventories to shift from a decline to an increase, with inventory buildup pressure rising. In terms of port spot prices, the weekly average price of PB fines at Qingdao Port fell by 19 yuan/mt WoW.
Looking ahead to next week, hot metal production at blast furnaces will edge up, lending some support to iron ore demand. However, expectations of further coke price increases will keep steel mill profits under pressure. At the same time, end-use demand is expected to weaken. Additionally, the U.S.-Iran conflict is nearing its end, and seaborne freight cost support continues to collapse. Overall, iron ore prices are expected to remain under pressure and in the doldrums next week.
Coke: Tight Supply Pattern Hard to Change; Next Week Coke Market May Continue to Hold Up Well
On the news front, major coke producers have initiated the sixth round of price increases, with an increase of 50 yuan/mt for wet-quenched coke and 55 yuan/mt for dry-quenched coke, effective from 0:00 on June 8, 2026. On the supply side, coking coal resources have continued to tighten, forcing some coking plants to limit production. Enterprises have seen smooth sales, and coke plant inventories remain generally low. On the demand side, blast furnace operating rates at steel mills have stayed high, hot metal output has not been reduced, providing ample support for rigid coke demand. As for coking coal, coinciding with the June Safety Production Month and compounded by a coal mine safety accident in Shanxi, regional safety supervision tightened, hindering coal capacity release. Online auction supplies of various types were tight, and coal prices generally rose sharply. In summary, the tight supply pattern for coke is hard to change. Next week, the coke market may continue to hold up well.
Scrap Steel: Mills Cautious in Scrap Purchasing; Short-Term Prices May Consolidate at Lows
Supply side, with the strict enforcement of the reverse invoicing policy for renewable resources, industry transactions have become increasingly standardized, raising the overall circulation cost of steel scrap. Small recycling stations were forced to undergo rectification or shut down, making it more difficult to collect scattered steel scrap. Demand side, the June rainy season weighed on construction activity, causing a seasonal pullback in steel demand. Prices are more likely to fall than rise. Given limited profit per mt of steel, blast furnace mills reduced scrap purchasing and actively lowered the scrap addition ratio. Short-process electric furnace mills, mostly in a state of marginal profit or losses, procured scrap mainly to meet rigid demand. Overall, the fundamental performance of steel scrap is likely to present a scenario of both weak supply and demand. It is expected that short-term scrap prices may consolidate at lows.
Rebar: Raw Material and Finished Product Trends Diverge; Spot Prices Struggle to Catch Up
This week, rebar prices initially rose then fell, with the current nationwide average price at 3,208 yuan/mt, down 8 yuan/mt WoW from last Friday. Supply side, an electric furnace mill in the southwest region completed technological transformation this week, with a slight increase in production, but some mills in east China underwent additional maintenance or switched to producing more coil, causing overall building material production to decline. According to SMM data, planned total production of sampled mills in June declined, but daily production actually edged up, with little overall change. This was mainly because mill margins were further squeezed recently, with most mills at marginal profits, and in the short term they can still maintain the previous production pace. Demand side, with the approaching gaokao and zhongkao exams, different regions imposed varying controls on project terminals. Combined with the impact of periodic heavy rainfall in south China, the overall pace of demand release slowed. Short-term demand will remain weak. Inventory side, the pace of destocking of total building material inventory continued to slow. Coupled with some construction restrictions due to the exams and the approaching rainy season in south China, inventory will shift from decline to increase in the later period. Looking ahead, the raw material side remains relatively strong. Although the cost side provides support, the supply-demand imbalance in finished steel is gradually building, and amid weak demand expectations, spot prices struggle to catch up. Consequently, market prices are expected to face downward pressure next week.
HRC: Cost Support, Weak Demand; HRC to Move Sideways Next Week
Prices of cold-rolled and hot-rolled products weakened this week, with overall transactions worsening WoW. Supply side, the impact from maintenance on rolling lines decreased WoW, and overall HRC production showed an increase. Demand side, apparent demand edged up slightly WoW. Inventory side, SMM statistics showed HRC social inventory at 86 warehouses nationwide stood at 4.3519 million mt, down 114,500 mt WoW, or a 2.56% WoW decline. By region, inventory in South China and Northeast China accumulated slightly, while North China, East China, and Central-West China continued destocking. Cost side, coking coal and coke futures were relatively strong this week; the fifth round of coke price increases was implemented, providing firm cost support for HRC. Looking ahead, coke has initiated a sixth round of price increases, and according to SMM statistics, hot metal production is expected to continue rising, still providing demand support for iron ore. Overall, the cost side remains supportive. From the HRC supply-demand fundamentals, the imbalance has not yet accumulated to the point of weighing on prices. However, considering that during the current off-season, downstream buyers are mainly purchasing as needed, demand is unlikely to see a significant increase, which will cap price gains. HRC prices are expected to continue moving sideways next week, with the most-traded HRC futures contract trading in the 3,340-3,420 range.
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