Ferrous Products Prices Dropped As A Whole Last Week

SHANGHAI, Feb 21 (SMM) - Ferrous production prices dropped as a whole last week on the back of political intervention, with iron ore prices led the losses. Finished products prices corrected slightly. Multiple central government department convened a series of meetings to stabilise iron ore prices in light of abnormal price moves. As such, iron ore prices hit limit down on Tuesday, pulling down the prices of hot-rolled coil (HRC) and rebar. Inventory readings were disclosed in the second half of the week, which rose more slowly compared with a week ago. The steel mills and traders were more willing to hold firm to their prices, hence the spot prices presented less volatility.

Rebar output rose slightly last week after some EAF-based steel mills resumed the production. Looking forward, the steel mills in north China may still be restricted in terms of production until mid-March, according to SMM research. In addition, the EAF mills were clearly slow in resuming the production owing to tight steel scrap supply and poor profits, and the rebar output is unlikely to pick up significantly this week. In terms of HRC, a few steel mills in south China returned to normal production from maintenance, hence the output rallied. Going forward, HRC output will not rise steeply either as the output across mills in the south was already at a high level; while the production in north China will remain under production restrictions.

The terminals of rebar gradually resumed the production after the Lantern Festival, and the real transactions picked up slightly from a week ago. Nonetheless, the market was in a panic as rebar futures prices corrected last week, and most of the transactions were made with low prices. Looking into the near future, a great number of special government bonds were issued in Q4 2021, which will promote the actual progress of projects in March-April as the local governments were accelerating the construction of significant projects. In other words, steel demand will be strongly supported during this period. For HRC, most traders and terminals have returned to work as the Chinese New Year (CNY) holiday is about to end. The demand for HRC from major downstream industries such as automobiles and ships has been satisfactory recently, and the demand outlook in March is expectable.