Forecast for next week: Ferrous metals are still expected to see raw materials outperform steel products
This week, ferrous metals showed divergent moves with relatively choppy fluctuations. Early in the week, the four major stock indices closed lower across the board. Coking coal showed strong performance, with the most-traded 2609 contract hitting a high of 1,486.5 yuan/mt, while iron ore and steel futures tended to weaken. Subsequently, impacted by news that relevant departments in Shaanxi Province required coal enterprises to ensure supply, coupled with persistently weak steel consumption, the supply-demand imbalance gradually accumulated, and coking coal and coke futures plunged sharply. In the latter half of the week, on the one hand, news of tighter iron ore shipments and tightening market liquidity drove iron ore futures higher; on the other hand, the escalation of coking coal supply tightness again pushed up coking coal and coke as well as HRC and rebar futures. In the spot market, the sixth round of coke price increases was implemented mid-week, further squeezing steel mill profits. Downstream purchase willingness remained weak, and overall transactions were poor this week.
In the short term, against the backdrop of tight supply, coal and coke prices still have upside room. For steel products, the continued impact of the off-season and weak downstream consumption will limit upside room for steel prices. Overall, ferrous metals are expected to continue to see raw materials outperform steel products next week, and steel mill profits will further narrow. Going forward, attention should be paid to whether narrowing profits lead to a decline in hot metal production, thereby dampening expectations for further upside in raw material prices.
Iron ore: A sharp increase in hot metal provides bottom support; prices bottomed out and rebounded this week
Iron ore prices bottomed out and rebounded this week, but the center continued to move lower. Early in the week, affected by news of the US-Iran conflict, crude oil prices fell and dragged the ocean freight rate down significantly, and iron ore prices declined accordingly, with both the most-traded contract and port spot prices hitting recent lows. Looking ahead to next week, iron ore fundamentals are expected to remain weak. In terms of supply, Australia and Brazil entered a push for annual target at year-end cycle for the fiscal year, port arrivals stayed high, and pressure from port inventory buildup continued to increase. On the demand side, finished steel consumption was in the off-season; coupled with coke prices staying high and eroding steel mill profits, hot metal production had peaked and pulled back. Steel mills maintained a low-inventory, fast-turnover procurement strategy, and spot market transactions were relatively light. From a macro perspective, the US dollar held up well, and together with the decline in the ocean freight rate, support from iron ore CFR costs loosened somewhat. However, ore prices are currently at relatively low levels, pessimistic sentiment had been released fairly fully earlier, and rigid restocking demand from steel mills still exists, which will provide some bottom support for prices.Overall, iron ore futures prices are expected to hover at lows next week, with limited upside and downside room.
Coke: Fundamentals are favorable; the seventh round of price increases is about to be implemented next week
On the news front, steel mills in some regions had already accepted increases of 50 yuan/mt for wet-quenched coke and 55 yuan/mt for coke dry quenching, effective from 00:00 on June 15, 2026 (the seventh round). In terms of supply, as the rise in raw material coal slowed down, although the sixth round of coke price increases had been implemented, cost pressure on coke producers remained, and losses had not materially improved. In addition, with safety inspections tightening, capacity release by coke producers was constrained. Coupled with active procurement by downstream steel mills and low inventory at coking plants, coke supply remained tight. On the demand side, steel mill production was stable and hot metal output stayed high, keeping rigid demand for coke solid, while low-inventory steel mills showed strong willingness to restock. For coking coal, due to the dual impact of mine accidents and the June safety month, safety inspections tightened across the board, and many coal mines in multiple regions suspended production or cut production, tightening raw coal supply. In addition, with the sixth round of coke price increases implemented, coke producers and traders were active in procurement; coal mine inventories were low and supply was tight, with strong bullish expectations in the market, and coal prices still had upward momentum. Overall, the cost side provided strong support, steel mill arrivals were tight and overall inventory was low, and the tight coke market is expected to continue.The market is expected to hold up well next week, with strong expectations that the seventh round of coke price increases will be implemented.
Steel scrap: The pattern of weak supply and weak demand continued; prices may consolidate in the short term
In terms of supply, south China gradually entered the rainy season. In addition, this period coincided with the 2026 National College Entrance Examination, during which construction sites were required to stop generating noise during specified hours, directly affecting construction steel scrap output and recycling efficiency. Steel scrap supply remained relatively tight. On the demand side, upward momentum for finished steel was constrained by the traditional off-season. With steel scrap still at a cost disadvantage versus hot metal, blast furnace steel mills had limited room to significantly raise the scrap ratio. Meanwhile, EAF steel mills had limited profit room per mt of steel, and most maintained mid-to-low operating hours, with steel scrap procurement mainly based on rigid demand. Overall, tight supply and tight availability of invoices provided bottom support for steel scrap prices. However, considering steel mill profits were under pressure and end-use demand showed limited improvement, this support also capped steel scrap prices to some extent.Steel scrap prices are expected to consolidate in the short term.
Rebar: Raw materials drove market sentiment; spot prices may move sideways in the short term
Rebar prices moved lower first and then higher this week. The nationwide average price was 3,191 yuan/mt, down 17 yuan/mt from last Friday. On the supply side, production profitability at blast furnace steel mills deteriorated recently, but most still remained in a marginal-profit stage, and production largely stayed at prior levels. Some steel mills in north China increased production this week to ensure end-use demand, and overall production edged up. Production at EAF steel mills varied by region: in east China and south China, profitability continued to be squeezed, and some mills faced rising inventory pressure and reduced operating hours; however, in southwest China, it was the rainy season, electricity costs were subsidized, and some mills raised operating hours. Overall production changed little. On the demand side, early in the week during the college entrance examination, some regions imposed restrictions on construction sites, limiting demand release. Mid-week, stimulated by news on the raw material side, demand saw a phased increase, but later, after project demand was met, overall transactions pulled back. In terms of inventory, during the off-season for demand, total inventory shifted from decline to increase. Recently, agents’ cargo pick-up was relatively slow, and mill inventory accumulated slightly faster than social inventory. Overall, the market at this stage mostly followed news on the raw material side, with sentiment driving price fluctuations. Meanwhile, rebar’s own fundamental contradictions began to accumulate, with insufficient driving force and downward pressure that dragged prices lower.Spot prices are expected to move sideways within a range next week.
HRC: Cost support & a deepening off-season Prices are expected to continue moving sideways within a range next week
HRC prices fluctuated downward this week, with the weekly average price edging lower and overall transactions decreasing. In terms of supply, maintenance on rolling lines decreased this week, and overall HRC production edged up. In terms of demand, apparent demand for HRC deteriorated again this week. Downstream entered the off-season, and high temperatures and rainfall constrained project starts. Speculative demand exited, end-users’ wait-and-see sentiment intensified, and actual procurement volume gradually decreased. In terms of inventory, SMM data showed that nationwide HRC social inventory at 86 warehouses (large sample) was 4.279 million mt, down 72,900 mt WoW, down 1.68% WoW. By region, inventory built up WoW in the Northeast and South China markets, while destocking occurred WoW in the East China, North China, and Central China markets, and inventory drawdowns supported HRC prices. On the cost side, the average iron ore price edged lower, and the sixth round of coke price increases was implemented, slightly strengthening cost support for HRC. Looking ahead, costs may continue to increase, but as the off-season effect deepens, the pace of HRC inventory drawdowns may narrow. In the short term, HRC prices may move sideways within a narrow range.In summary, the most-traded HRC contract is expected to trade in the 3,340-3,410 range next week.
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