This week, the ferrous metals series saw a narrow pullback after a rebound from low levels. Among them, iron ore outperformed other ferrous metals, while coke showed weaker performance. On the macro front, the China-U.S. economic and trade talks in Geneva on May 12 indicated a 90-day suspension of the 34% reciprocal tariffs imposed on April 2, 2025, with a 10% portion remaining in place during the suspension period. This temporary tariff relief provides greater possibilities and more ample room for China to rush exports in the short term. However, from a medium and long-term perspective, the easing of the tariff environment is not yet a permanent solution, as the current 30% tariff remains higher than those imposed on other countries. In the spot market, influenced by improved market sentiment, both the spot prices and trading volumes of hot-rolled coil and rebar saw improvements...

[Coke enterprises maintain relatively high operating rates, but shipping pressure increases] From the market perspective, coke enterprises' production profits are moderate, and their enthusiasm for production is high, keeping coke supply at a high level. The shipping pace of some coke 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. Additionally, with the arrival of the off-season, 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, coke enterprises' operating rates remain at a relatively high level, but shipping pressure has increased.

[SMM Daily Review of Coking Coal and Coke] In terms of supply, the first round of coke price cuts has been implemented, but most coking enterprises remain at the break-even point, with stable production and active shipments. There is currently no inventory pressure on coke. Demand side, the peak demand season for steel is gradually fading, with pig iron production at steel mills peaking and then pulling back. Steel mills are cautious in purchasing, and currently, most steel mills have relatively high coke inventory levels, maintaining purchasing as needed overall. In summary, the supply and demand structure of coke is trending towards looseness. After the first round of price cuts, the coke market may continue to be in the doldrums in the short term.

[SMM Coke and Coking Coal Inventory: Coke inventory at coking plants this week was 309,000 mt] Coke inventory at coking plants this week was 309,000 mt, up 24,000 mt or 8.4% WoW. Coke inventory at steel mills was 2.675 million mt, down 33,000 mt or 1.2% WoW. Coke inventory at ports was 1.48 million mt, down 40,000 mt or 2.6% WoW. Coking coal inventory at coking plants was 2.628 million mt, down 31,000 mt or 1.2% WoW.

[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.