SMM December Ferrous Metals Market Review And January Forecast

Ferrous metals prices moved wildly in December. At the beginning of December, the expectations for policy stimulus from China's Central Economic Work Conference boosted market sentiment. At the same time, frequent coal mine accidents boosted coal prices. The futures prices of most ferrous metals hit a six-month high. In mid-December, the China's Central Economic Work Conference ended, and policies introduced during this meeting failed to meet market expectations. In addition, the macro front was relatively quiet, and the upward potential was limited for fundamentals of the industry, leading to rapidly fall in ferrous metals prices. At the end of December, the market ushered in the third round of "interest rate cuts". With the advent of environmental protection restrictions, steel mills have significantly reduced production, which boosted the steel market. Due to the low raw material inventory, stocking supported the raw material market. The ferrous metals prices fluctuated and inched higher. Looking forward, the macroeconomic environment is still favorable in January. In terms of fundamentals, weather and Spring Festival have led to seasonal weakening of industry chain fundamentals, and the steel inventory began to build up. Meanwhile, as the Red Sea crisis disrupted global shipping, steel exports faced greater resistance and the upward potential was limited for ferrous metals. On the other hand, the raw material inventories of enterprises in the industrial chain were generally at a low level at the end of the year, thus restocking is expected, which will support the steel prices. It is expected that the prices of ferrous metals will move sideways in January.