SMM Daily Comments of Ferrous Metals Market (Mar 10)

SHANGHAI, Mar 10 (SMM) - 

Macro

China

Analyst: China's inflationary pressure is relatively moderate, and there is more room for policy to promote consumption in the later stage

Overseas

Bank of Canada’s Rogers: Pausing rate hikes depends on economic developments

Raw materials:

Iron ore

Iron ore futures fluctuated yesterday. The most-traded I2305 contract closed at 916.5 yuan/mt and rose 0.6%. The overall transactions were moderate. Traders shipped modestly, and steel mills purchased cautiously. Traded price of PB fines in Shandong moved between 912-920 yuan/mt, down 3-5 yuan/mt from the previous trading day, and that of PB fines in Tangshan was 935 yuan/mt, flat from the previous trading day.

News about the investigation by relevant state departments spread across the market yesterday, which caused fluctuations in the iron ore traders’ sentiment. In addition, the possibility of the Fed raising interest rates by 50 basis points is increasing recently and China's CPI data was lower than expected, throwing a cold water on the market confidence. On the fundamentals, the output growth of pig iron was limited. The steel demand recovered slowly.

Coke

On March 9, 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.

Downstream companies were less willing to purchase, and traders slowed down the goods pick-up. Quotes offered by coal mines were stable, and quotations of some coal types fell.

Coke production by some companies was hindered by losses, environmental protection-related production restrictions and other factors, while the coke demand did not decrease, hence the inventory held by coke producers was low. On the demand side, steel mills maintained high operating rates, and the coke demand still existed.

Steel scrap

Purchasing prices of steel scrap offered by mainstream steel mills fell 20 yuan/mt.

Finished products:

Rebar

The rebar futures prices fell in the early trading period yesterday but then rebounded stimulated by the unexpected favourable data in the afternoon.

This week, the destocking speed of in-plant inventory and social inventory has accelerated. Among them, the rebar inventory has decreased 4.6% from last week, and the HRC inventory has decreased 1.7% from last week. Overall market was good yesterday and the transactions were active amid strong demand from infrastructure projects.

HRC

HRC futures prices fluctuated upwards within a wide range yesterday and gained 1.36%. In the spot market, the transactions were acceptable yesterday , driven by rising futures prices while some market players were more wait-and-see.

According to SMM statistics, the social inventory of HRC in 69 warehouses (large survey samples) across China was 4.49 million mt, down 235,100 mt from the previous week. Automobile production and sales picked up in February, and the supply and demand of HRC improved marginally , but the sustainability of the recovery of downstream rigid demand remains to be seen.