Steel prices have limited downward room as the prices have been lower than steel scrap prices and some steel mills operate at a loss

In June, domestic ferrous metals series prices fluctuated downward. In the first half of the month, the rumour spread that China will continue to implement crude steel restrictions by reducing nearly 30 million mt YoY in 2024. Steel mills in Fujian were the first to hold a meeting on crude steel production reduction, leading to weaker raw material prices, and steel prices followed suit. In the latter half of the month, most regions in China entered the rainy season, with rainfall in Central, East, and South China even exceeding previous years' levels, further inhibiting steel demand. The deterioration of steel fundamentals dragged down ferrous metals series prices in the latter half of June.

Looking ahead, July is still an off-season for demand, but most regions are expected to see the end of the rainy season. Therefore, rigid demand procurement is expected to slightly rebound. Due to subdued profits and sales, production cuts and maintenance by steel mills may increase slightly in July. It is anticipated that in July, the fundamentals of raw materials may slightly weaken, while the fundamentals of steel may improve. Considering that current steel prices are lower than steel scrap prices and some steel mills operate at a loss, steel prices have limited downward room. Ferrous metals series prices are expected to bottom out in July.