[SMM Steel Morning Meeting Summary] In the spot market, most daily quotes remained stable, with overall transaction performance being moderate. SMM released the weekly supply and demand data for HRC. This week, maintenance work at some steel mills in east China, north China, and parts of south China was relatively concentrated. Coupled with the MoM decline in the daily average production schedule of domestic steel mills' HRC in May, HRC production saw a significant MoM pullback. This week, SMM's statistics showed that the social inventory of HRC in 86 warehouses (large sample) nationwide was 3.3304 million mt, down 106,100 mt MoM, a 3.09% MoM decrease and an 18.45% YoY decrease compared to the new calendar year. This week, the nationwide social inventory declined. By region, the central China market began to experience a slight inventory buildup, while the east China market saw a relatively larger decline, with inventories in other regions decreasing slightly. In the short term, with the easing of supply pressure and moderate demand resilience, inventory continues to decline and remains at a relatively low level compared to the same period in previous years. The fundamental imbalance in the HRC market is not apparent, providing support for the price floor. Considering that the reduction in tariffs has boosted market sentiment to a certain extent, it is expected that HRC prices will still have a slight upward space in the short term.

The General Offices of the Central Committee of the Communist Party of China and the State Council issued the "Opinions on Continuously Promoting the Urban Renewal Initiative." The main objectives are as follows: By 2030, significant progress will be made in the implementation of the urban renewal initiative, with continuous improvement in the institutional mechanisms for urban renewal. Initial results will be achieved in the transformation of urban development and construction methods, a more solid foundation for safe development, continuously enhanced service efficiency, a significantly improved living environment, a more diversified economic landscape, effective protection of cultural heritage, more prominent urban characteristics and styles, and cities becoming spaces for the high-grade life of the people.

[SMM Daily Commentary on Coking Coal and Coke] In terms of supply, the price reduction of coking coal has led to profit recovery, with coking enterprises maintaining high production enthusiasm and stable supply at a high level. In addition, coking enterprises are actively shipping goods, keeping their own coke inventory at a low level. Demand side, steel mills are in good profitability, with blast furnace operation rates remaining high, maintaining a rigid demand for coke. However, steel mills generally have high coke inventory, coupled with the increasing expectation of raw material price reductions, leading to cautious procurement strategies by steel mills. In summary, market sentiment has turned pessimistic, and it is expected that the coke market may be in the doldrums in the short term.

According to the latest tracking by SMM, the planned production volume of HRC commodity materials for 39 mainstream steel mills in May totaled 14.1287 million mt, up 55,800 mt or 0.4% from the actual production volume of HRC commodity materials in April. On a daily average basis, there was one more day in May than in April. The planned daily average production volume of HRC commodity materials in May was 455,800 mt, down 13,300 mt or 2.8% from the actual daily average production volume of HRC commodity materials in April.

[SMM Steel Morning Meeting Summary] In terms of supply, coke producers' production profits are moderate, and they are highly motivated to operate, keeping coke supply at a high level. However, the shipment pace of some coke producers has slowed down, resulting in certain inventory pressure. On the demand side, steel mills' coke inventory is at a medium-to-high level, with weak restocking demand. As the off-season approaches, the number of blast furnace maintenance operations is gradually increasing. Some steel mills have slowed down their purchasing pace, mainly purchasing as needed. In summary, the market is beginning to transition into the off-season. Pig iron production has basically peaked. Coupled with the relatively high level of coke inventory at steel mills, the short-term coke market may be in the doldrums, with the first round of price cuts expected to be implemented.

Foreign Ministry spokesperson Lin Jian stated that China and the United States had reached multiple positive consensus during their economic and trade talks in Geneva, agreeing to significantly reduce bilateral tariff levels. The US side committed to removing 91% of tariffs and suspending the implementation of 24% reciprocal tariffs. Correspondingly, the Chinese side also removed 91% of retaliatory tariffs and suspended the implementation of 24% retaliatory tariffs, with both sides retaining 10% tariffs each. The US side, using fentanyl as a pretext, unreasonably imposed two rounds of tariffs on China, to which the Chinese side promptly took retaliatory measures, including tariff and non-tariff measures, to firmly safeguard its legitimate rights and interests. These retaliatory measures remain in effect.

[SMM Daily Review of Coking Coal and Coke] In terms of supply, coking enterprises have moderate production profits and high enthusiasm for operation, keeping coke supply at a high level. However, the shipment pace of some coking enterprises has slowed down, resulting in certain inventory pressure. On the demand side, steel mills' coke inventory is at a medium-to-high level, with weak restocking demand. As the off-season approaches, the number of blast furnaces under maintenance is gradually increasing. Some steel mills have slowed down their purchasing pace, mainly purchasing as needed. In summary, the market is beginning to transition into the off-season. Pig iron production has basically peaked. Coupled with the relatively high level of coke inventory at steel mills, the coke market may be in the doldrums in the short term, and the first round of price cuts is expected to be implemented.

[SMM Steel Morning Meeting Summary] On the spot market, intraday quotations fluctuated relatively small on a WoW basis, with market transactions weaker than yesterday. According to SMM data, this week's HRC inventory in Shenyang was 104,300 mt, down 2,000 mt WoW, a decrease of 1.88%. It was also down 64,700 mt YoY, a decrease of 38.28%. On the fundamental side, the daily average HRC production schedule in May decreased slightly MoM from April, with supply pressure less than previously expected. In the short term, the Sino-US tariff war has come to a temporary halt, and the trading space for favourable macro front has narrowed. There is insufficient momentum for HRC prices to rise further, and it is expected that the most-traded contract will fluctuate within the 3140-3280 range in the short term. In the medium and long-term, off-season demand will gradually pull back. Without further macroeconomic stimulus, the price center of HRC will still move lower.

Foreign Ministry spokesperson Lin Jian hosted a regular press conference on May 13. A reporter from Agence France-Presse asked whether the spokesperson could provide detailed information on the next phase of China-US economic and trade talks, and whether there were plans to discuss the 20% special tariff imposed by the US on Chinese exports on the grounds of fentanyl. Lin Jian stated that regarding the high-level economic and trade talks between China and the US, the competent Chinese authorities had already released information. On the issue of fentanyl, China had repeatedly made it clear that fentanyl was a US issue, not a Chinese one, and that the responsibility lay with the US itself. The US had ignored China's goodwill and unreasonably imposed fentanyl tariffs on China, which had severely impacted China-US dialogue and cooperation in the field of drug control and also seriously harmed China's interests. "If the US truly wants to cooperate with China, it should stop smearing and shifting blame onto China and engage in dialogue with China in an equal, respectful, and mutually beneficial manner," Lin Jian said.

SMM Steel News on May 13: According to SMM statistics, the estimated total resource shipments in the mainstream market this week were 244,500 mt, a decrease of 1,500 mt WoW from the shipment level last week. By market: