[SMM Steel Morning Meeting Summary] Rebar Breaks Through 3,000 Points, Ferrous Metals Series Under Pressure

Domestic ore:

This week, Shandong miners reported a price of 850 yuan/mt (before tax, dry basis, acceptance payment) for 64-grade alkaline ore, down 15 yuan/mt from the previous week. Steel mills followed suit with price reductions. Most miners are operating normally, but overall market transactions remain sluggish. Some mines and beneficiation plants have seen inventory buildup, leading to significant selling pressure. Some steel mills are still undergoing maintenance and maintaining low inventory operations. The proportion of imported ore in the blend is relatively high, and transactions of domestic ore have been weak throughout the week. Looking ahead, influenced by the downward trend in iron ore futures, it is expected to have a bearish impact on domestic iron ore concentrate prices. It is anticipated that iron ore concentrate prices may continue to decline in the later period.

Imported ore:

Yesterday, DCE iron ore futures continued to fall, with the most-traded contract I2509 closing at 706, down 2.21% for the day. Traders' willingness to sell was average; steel mills adopted a cautious wait-and-see attitude, with relatively low procurement enthusiasm. Market transaction sentiment was average. The mainstream transaction prices of PB fines in Shandong were in the range of 740-745 yuan/mt, down 10-15 yuan/mt from last Friday. In Tangshan, the transaction prices of PB fines were around 755-760 yuan/mt, down 10-15 yuan/mt from last Friday.
Last week, SMM's global iron ore shipments totaled 35.4 million mt, increasing by 1.35 million mt WoW, with the growth rate slightly narrowing. Among them, Brazil saw the largest increase in shipments. SMM's total iron ore arrivals in China were 25.48 million mt, a decrease of 800,000 mt WoW. The supply of iron ore continued to increase slightly. Today, news about the crude steel production reduction policy has once again attracted market attention. Some steel mills in Shandong have clearly stated that they will implement production reduction plans. This move has significantly suppressed iron ore prices, leading to a substantial decline during the day. From the perspective of the short-term market situation, with sustained weak end-use demand and the continuous impact of the crude steel production reduction policy, it is expected that iron ore prices will maintain a weak and fluctuating trend.
Coking coal market:
The quoted price of low-sulphur coking coal in Linfen is 1,230 yuan/mt. The quoted price of low-sulphur coking coal in Tangshan is 1,280 yuan/mt.
In terms of fundamentals, most coal mines are operating normally, with a few reducing production slightly, leading to a slight contraction in overall supply. However, downstream buyers are adopting a wait-and-see attitude. After a widespread decline in online auction transaction prices, order signing at coal mines remains unoptimistic, and coking coal inventory at coal mines has accumulated. Therefore, coking coal prices may continue to decline under pressure this week.
Coke market:
The nationwide average price of premium metallurgical coke (dry quenching) is 1,625 yuan/mt. The nationwide average price of high-grade metallurgical coke (dry quenching) is 1,485 yuan/mt. The nationwide average price of premium metallurgical coke (wet quenching) is 1,290 yuan/mt. The nationwide average price of high-grade metallurgical coke (wet quenching) is 1,200 yuan/mt.
In terms of supply, coking enterprises are maintaining profits and stable production, but shipments are facing certain obstacles, leading to a slight inventory buildup. Coke supply is leaning towards being loose. In terms of demand, the market is gradually entering the off-season, and recent frequent high temperatures and rainfall have weakened downstream end-use demand. Additionally, most steel mills' coke inventories are at medium to high levels, reducing their enthusiasm for coke procurement. In summary, the supply-demand imbalance in the coke market continues to accumulate, and the impact of the off-season in finished steel products has become prominent. Some steel mills have already proposed a second round of price reductions for coke. This week, coke prices are expected to operate in the doldrums.
Rebar

Yesterday, rebar futures fluctuated downward, closing at 3,004, down 1.67% from the previous trading day. In terms of spot prices, spot quotes in various regions mainly fell in the morning. The market sentiment was thick with wait-and-see. In the afternoon, rebar futures fluctuated around the 3,000 level without significant signs of rebound, and spot prices further declined. Prices in some regions fell by approximately 10-50 yuan/mt, with overall transaction performance being weak. From a fundamental perspective, on the supply side, blast furnace steel mills continued maintenance and production halts as planned, with a slight increase in the volume of steel mill maintenance. EAF steel mills' profitability was poor, and most maintained a production rhythm of operating during off-peak and valley electricity periods, slightly alleviating overall supply pressure. On the demand side, end-users mostly maintained purchasing as needed, with only a few regions experiencing concentrated procurement after the market closed due to accumulated demand orders from the previous period. Overall, the current fundamental contradictions in the construction steel market are not prominent. However, influenced by market sentiment in the futures market, market confidence is insufficient. It is expected that spot prices of construction steel will operate in a weak and fluctuating trend in the short term. Subsequent attention should be focused on information regarding crude steel production reductions.

Hot-rolled coil (HRC)

Yesterday, the HRC futures market weakened significantly, with a daily decline of 2.03%, closing at 3,138, breaking below the previous low. Spot prices followed suit and declined, with the mainstream HRC trading market falling by 20-50 yuan/mt. The significant decline in the futures market led to widespread wait-and-see sentiment among downstream buyers, and overall market transactions were weak during the day. In terms of news, according to CISA statistics, in April, the production of medium-thickness plate mills among key statistical enterprises continued to increase YoY, while the production of hot strip mills decreased slightly, and the production of cold strip mills remained flat.

From the perspective of HRC fundamentals, although HRC prices are gradually coming under pressure due to weak supply and demand during the off-season, in the short term, cost support has not collapsed, and inventory levels are comparable to the same period last year. The market is heavily influenced by fluctuations in the futures market, with pessimistic sentiment prevailing. However, the current fundamental contradictions are not significantly prominent. Therefore, it is expected that HRC prices will continue to fluctuate rangebound and in the doldrums in the short term, with a relatively low possibility of prices falling sharply again.