Ferrous Products Prices Rose as A Whole Last Week

SHANGHAI, Mar 7 (SMM) - Ferrous products prices rose as a whole due to recovering demand and robust external market. Ferrous products prices rose as a whole last week. On the raw material side, iron ore and coking coal led the gains. The most-traded iron ore futures hit the limit up in the past week. Steel prices stabilised and then rebounded in light of gradually recovering demand, and market transactions improved slightly week-on-week. Negotiations between Russia and Ukraine in the external market did not achieve the expected results, and the situation was relatively severe, which intensified the fluctuations of the futures market. And the varieties with large import and export volumes all saw significant increases. The second round of coke price hike fruited, and there are still expectations for a follow-up hike. The spot and futures prices of hot-rolled coil (HRC) continued to rise, and speculative transactions were heated, but spot transactions were relatively modest.

The output of finished products rose last week maid slightly loosening production restrictions. On the supply side, some steel mills in north China saw slightly easing production restrictions, and the operating rates of EAF mills also rose, resulting in slightly higher output week-on-week. Looking forward, air quality requirements will be quite strict during the Winter Paralympics and the Two Sessions, thus the operating rates of blast furnaces will drop slightly. For EAF mills, on the other hand, the operating rates will see limited upside room as the current rates were already above 60% amid improving profits. On the whole, it is expected that the output of rebar will increase slightly this week. In terms of HRC, the output growth slowed down last week, which may be a result of maintenance conducted by some steel mills. Looking into this week, a new round of production restrictions will begin soon, hence it is expected that HRC output could hardly rise significantly and remain at a low level in the short term.

The demand will revive more quickly in the traditional production recovery period and expected rising exports. In terms of rebar, construction projects have re-started one after another as the weather condition improved last week, and the apparent demand grew from  a week ago. Looking forward, the country is expected to resume normal construction rhythm in March, and the terminal demand is still recovering. In terms of HRC, due to the recent surge in coil prices, it is reported that the performance of terminal demand was weaker than expected. However, as the conflict between Russia and Ukraine continues to escalate, it is rumoured that the Europe may turn to Asia to source steel products like HRC. According to SMM research, some steel mills said that export orders have been relatively good recently, which may further boost HRC prices. In addition, the central government has been issuing various supporting policies. As such, some HRC downstream sectors have already entered the traditional high in March and April. It is expected that the apparent demand will rise more quickly in mid and late March.