Ferrous Metals Prices Generally Close with Losses on Feb 27

SHANGHAI, Feb 28 (SMM) -

Macro

China

Shanxi province launched a 100-day production inspection on coal mines

Shenzhen Stock Exchange held a symposium on market players in the real estate industry to promote the effectiveness of real estate-related policies

Overseas

JPMorgan Chase: China's economy is expected to grow 5.6% in 2023

Raw materials:

Iron ore

Yesterday, iron ore futures still fluctuated with some downs, and the most-traded I2305 contract closed at 885.5 yuan/mt, down 2.53%. The overall transaction was acceptable. Steel mills purchased on demand. Traded price of PB fines in Shandong moved between 893-907 yuan/mt, down 5-10 yuan/mt from the last Friday, and that of PB fines in Tangshan was 905-910 yuan/mt, down 10-15 yuan/mt

SMM survey showed that the global shipments of iron ore totalled 31.37 million mt, up 16.1% WoW. Imports from Australia stood at 18.69 million mt, up 23.4%, and those from Brazil reached 6.33 million mt, up 7.8%. However, the arrivals at ports last week dropped 9.39% on a weekly basis to 25.85 million mt as a result of falling shipments from Brazil in the early stage. Since February 25, many cities in Hebei province have restricted production due to environmental protection, and the production of sintering machines was cut by 30-50%. Demand for iron ore decreased, and the prices fell.

Coke

On February 27, the traded price of quasi-first grade metallurgical coke (coke dry quenching) in Lvliang city, Shanxi province was 2,890 yuan/mt (ex-factory), flat from the previous trading day.

Coking coal Safety inspections in various regions were strictly enforced because of the Two Sessions and the coal mine collapse in Inner Mongolia. Some coal mines in Inner Mongolia suspended or cut their production, tightening the coking coal supply. Downstream companies and traders were more willing to purchase, slightly pushing up quotes offered by some coal mines.

Coke quotes offered by some coke companies in Shandong, Hebei and other places were raised by 100-110 yuan/mt. Downstream demand is gradually improving, reducing coke stocks carried by coke companies. And some became reluctant to sell.
On the demand side, coke demand from steel mills kept growing. As steel consumption has gradually picked up recently, the profit margins of steel mills grew, which further drove the pig iron output.
The shipments of coke companies increased thanks to the higher purchasing volume by some traders and steel mills. In addition, coking coal prices rose. The short-term coke prices may be stable with occasional rises.

Steel scrap

The purchase prices of steel scrap declined in many places in China yesterday. Among them, the prices in east China dropped 20-30 yuan/mt, that in central China dropped 30-40 yuan/mt, that in southwest China dropped 20-30 yuan/mt and that in north China dropped 10-40 yuan/mt.

In the short term, steel mills’ demand for steel scrap increased as they produced actively amid considerable profits. As such, prices of steel scrap are likely to increase this week.

Finished products:

Rebar

Rebar futures fluctuated downward yesterday, with a decrease of 0.64% throughout the day. Last weekend, Tangshan and Handan launched a level II emergency response to heavily polluted weather, which actually had a limited impact on production. But under the influence of market sentiment, iron ore prices fell sharply, and rebar futures followed suit. In terms of spot goods, the resumption of construction sites boosted the rigid demand and the transactions of low-priced goods were active. But the futures market was weak, and the speculative demand turned cold slightly.

On the demand side, real estate projects have no obvious signs of recovery in the short term, but resumed actively, giving bottom support to the rebar demand. On the supply side, the profits of steel mills have slightly recovered, and some steel mills may resume in March. But short-term supply growth is slow. On the macro front, the Two Sessions will be held this weekend, and the market is looking forward to the release of favourable policies. It is expected that rebar futures prices still have upside momentum after the short-term price falls.

HRC

HRC futures fluctuated widely yesterday and closed with losses of 0.16%. The transaction in the spot market weakened significantly amid the wait-and-see sentiment and some traders shipped at low prices. Due to the news of power cut in Hebei, the prices of iron ore fell sharply yesterday and the prices of HRC followed suit. However, this round of power cut is mainly targeted at sintering machines, which has little impact on the demand for iron ore. Coupled with the news of the coke price hike, the cost support of HRC is still relatively stable.

Steel demand is in the verification period approaching the Two Session. In the short term, the prices of HRC will continue to fluctuate in a wide range.