In June, domestic steel scrap prices fluctuated narrowly. As of June 30th, steel scrap price in Zhangjiagang was 2580 yuan/mt, an increase of 160 yuan/mt compared to the end of May. Turkey is the main source of steel scrap imports for China, and historical data shows that steel scrap prices in Turkey have long been lower than domestic prices. As of June 30th, the price of steel scrap in Turkey was $386/mt, equivalent to 2785 yuan/mt, which was 224 yuan/mt lower than the purchase price of Shagang scrap, and the price difference increased by 140 yuan/mt MoM.
Domestically, steel scrap prices fluctuated narrowly in June. Since the second quarter, the macro environment has weakened, and loose supply has led to sharp declines in prices of steel scrap, coking coal, steel, iron ore, and other products. At the same time, the high temperature and rainy season have led to a rapid contraction in the supply of steel scrap. After the full release of pessimistic sentiment, market expectations for new policy gradually strengthened. There have been continuous rumors of new policy since the end of May, driving a rapid rebound in prices of black series products. However, downstream industries such as real estate have shown weak demand, restraining the increase of scrap prices. Overall, scrap steel prices fluctuated narrowly in June. Looking ahead, the market still expects positive policy in the future. However, from a fundamentals perspective, the steel industry for building construction has transitioned to an off-peak season, and demand has significantly declined. The resilience of demand during the off-peak season faces challenges, and steel may enter a kind of inventory cycle, making it difficult to support an upward rebound in scrap prices. It is expected that scrap prices will continue to fluctuate in July.
Ferrous Metals Prices To Extend Significant Volatility In July, SMM Analysis From Macro And Fundamentals
In June, the price of ferrous metals fluctuated wildly. Since the second quarter, the weakening macro environment and ample supply have caused the prices of coking coal, coke, steel, iron ore and other ferrous metals to plummet. After the pessimism was digested, the market's expectations for policy stimulus are gradually increasing. Since the end of May, there have been constant rumours of policy stimulus, which has led to a rapid rebound in ferrous metals prices. As the sharp drop in coal and coke prices has reduced cost of steel mills, the immediate profits of steel mills have not deteriorated. The rebound in the operating rate of blast furnaces in June allowed iron ore prices to lead gains among ferrous metals. In the middle and late June, rumors of policy stimulus and crude steel production control were flying, which formed a strong support for the price of ferrous metals. However, from a fundamentals point of view, the demand for downstream real estate and other industries was sluggish, which curbed the gains of ferrous metals prices. Overall, ferrous metals prices fluctuated in a wide range in June.
Currently, the market still has expectations for favorable policy stimulus. From a fundamentals point of view, the construction steel industry is transitioning to the off-season, and demand has declined significantly. Steel stocks may build up, which will hardly support further rise in ferrous metals prices. It is expected that the ferrous metals prices will continue to experience great volatility in July.
![[SMM Hot-Rolled Arrivals] Arrivals in Major Mainstream Markets Pulled Back in the First Week After the Holiday](https://imgqn.smm.cn/usercenter/QMaot20251217171719.jpg)
