SMM Daily Comments of Ferrous Metals Market (Mar 14)

SHANGHAI, Mar 14 (SMM) -

Macro

China

Li Qiang, Premier of RPC: Various measures shall be taken to reach the predetermined target of 5% growth

Overseas

CME Fed Watch tool: Chance that the US Fed raises the interest rate by 50 basis points in March is 0

Raw materials:

Iron ore

The most-traded I2305 contract closed at 929 yuan/mt yesterday, up 0.49%. Steel mills purchased on rigid demand, while the traders were active in shipping, pushing up the spot trading. Traded price of PB fines in Shandong moved between 930-935 yuan/mt, flat from the previous week, and that of PB fines in Tangshan was 947-950 yuan/mt, up 2-5 yuan/mt.

According to the shipping data tracked by SMM, the total global iron ore shipments increased slightly by 1.9% to 31.45 million mt this week. Shipments from Australia fell slightly, while those from Brazil rebounded significantly. And the arrivals at Chinese ports also ballooned. On the demand side, the pig iron output loss caused by blast furnace maintenance decreased. There is no obvious contradiction between supply and demand. Iron ore prices may still be greatly affected by the news front.

Coke

On March 13, the traded price of quasi-first grade metallurgical coke (coke dry quenching) in Heze city, Shanxi province, was 2,960 yuan/mt (ex-factory), flat from the previous trading day.

Recently, some coal mines in Inner Mongolia, whose production has been limited due to coal mine accidents, have resumed production one after another, and the tight supply of coking coal has eased. At the same time, the demand from downstream enterprises was released slowly, and traders generally held a wait-and-see sentiment.  The quotations of some coal types with higher gains in the previous period fell, but the quotes offered by coal mines stabilised as a whole.

The cost of coke companies dropped, but the profits grew slightly. The companies maintained stable operating rates, and in-plant coke stocks were low. On the demand side, the pig iron output increased steadily, and the coke demand still existed. However, the coke inventory held by steel mills was at a medium or high level, so the mills were less willing to raise their purchase prices.

Steel scrap

On March 13, steel scrap prices added 20-140 yuan/mt.

Finished products：

Rebar

Rebar futures fluctuated upward yesterday. The spot prices moved rangebound within a narrow range. Some traders once lowered the quotes to stimulate the transactions.

On the supply side, the recent spot prices have grown, expanding the profit margins of BF mills and pushing up the production enthusiasm. The profits of EAF mills were at the break-even point. Some EAF mills are still expected to resume production. On the demand side, the overall transactions were good. The shipment of low-priced resources was smooth, while that of high-priced resources in some areas was restricted.

HRC

HRC futures prices hovered at highs and closed at 4,459 yuan/mt. Spot transactions in many places were acceptable. Recently, the market sentiment has been intertwined between long and short, and the contradiction between the overseas economic downturn and the moderate recovery of the domestic economy is expanding day by day.

On the supply side, affected by the maintenance of steel mills, the supply pressure will not be high in the middle and late March. The prices will hover at lows. On the demand side, according to SMM research, some downstream sectors are about to enter the peak season, and the mid-term demand is expected to grow sharply.