[SMM Steel Morning Meeting Summary] The second round of coke price cuts will be implemented, with the ferrous metals series showing a weakening trend

Domestic Ore:

In the Tangshan domestic ore market, prices declined slightly in some areas under pressure from steel companies. The ex-factory prices (dry basis, tax included) of 66% grade iron ore concentrates fell by 10-15 yuan/mt, now at 920-925 yuan/mt. The progress of local iron ore mine resumptions has been slow, with limited marketable resources available. On one hand, some producers, facing notably low inventory levels, are reluctant to sell goods amid difficulties in restocking. On the other hand, high-cost inventories at ore processors are hard to liquidate. Considering the insufficient demand from steel mills due to their low proportion of domestic ore usage, weak demand constrains the upward momentum of prices, resulting in a situation where both supply and demand are weak. Additionally, the recent weak performance of iron ore futures has further contributed to the expectation that local iron ore concentrate prices will likely continue to fluctuate downward in the short term.

Imported Ore:

Yesterday, the DCE iron ore futures market fluctuated downward, with the most-traded I2509 contract closing at 698.5, down 1.76% for the day. Traders sold goods in line with market conditions, while steel mills adopted a cautious wait-and-see attitude, purchasing as needed. Market trading sentiment was generally moderate. The mainstream transaction prices of PB fines in the Shandong region were 733-740 yuan/mt, down 5-10 yuan/mt from the previous day. In the Tangshan region, PB fines transaction prices were around 745-750 yuan/mt, also down 5-10 yuan/mt from the previous day.
Recently, iron ore demand has peaked and is expected to continue declining in the medium and long term, while supply has been increasing slightly. The overall supply-demand imbalance has widened. Meanwhile, demand across the entire industry is also weakening. The decline in finished steel prices has dragged down ore prices. Market sentiment remains relatively pessimistic. It is expected that ore prices will lack upward drivers in the short term and will continue to fluctuate downward. Considering that pig iron production is at a high level compared to the same period last year, the downward space for ore prices is limited, with prices mainly fluctuating within a narrow range.
Coking Coal Market:
The quoted price for low-sulphur coking coal in Linfen is 1,230 yuan/mt.
The quoted price for low-sulphur coking coal in Tangshan is 1,280 yuan/mt. In terms of fundamentals, coal mines are operating normally, with a few individual mines experiencing minor production cuts, but this has been insufficient to alter the overall loose supply situation. Downstream buyers maintain a strong wait-and-see attitude. Following the price decline, order signing at coal mines remains unoptimistic, leading to an accumulation of coking coal inventories at the mines themselves. Additionally, a second round of coke price cuts is anticipated, further weakening market sentiment. This week, coking coal prices are likely to continue facing downward pressure.
Coke Market:
The nationwide average price for premium metallurgical coke (dry quenching) is 1,625 yuan/mt. The nationwide average price for high-grade metallurgical coke (dry quenching) is 1,485 yuan/mt. The nationwide average price for premium metallurgical coke (wet quenching) is 1,290 yuan/mt. The nationwide average price for high-grade metallurgical coke (wet quenching) is 1,200 yuan/mt.
In terms of supply, coking enterprises are maintaining stable production with moderate profits, but shipments have faced certain obstacles, leading to a loosening of coke supply. On the demand side, southern China has entered the rainy season, with frequent high-temperature and rainy weather, resulting in a seasonal decline in steel demand. Pig iron production has peaked and is now declining. Additionally, most steel mills' coke inventories are at medium to high levels, weakening their rigid demand for coke. In summary, steel mills have a strong desire to drive down coke prices, and a second round of coke price cuts is expected to be implemented on Wednesday. This week, the coke market is expected to operate in the doldrums.
Rebar

Yesterday, rebar futures fluctuated downward, closing at 2,980, down 1.23% from the previous trading day. In terms of spot prices, the wait-and-see sentiment in the market continued to intensify, with spot prices across the country continuing to decline, falling by approximately 10-50 yuan/mt. Overall trading volume for the day remained weak. From a fundamental perspective, on the supply side, according to an SMM survey, a few steel mills slightly delayed the resumption of blast furnace maintenance, while some steel mills continued to halt rolling production. This week, the impact of maintenance on construction material production was 1.172 million mt, up 34,000 mt WoW, resulting in a slight decrease in supply. On the demand side, terminal procurement enthusiasm has significantly weakened, with a reduction in speculative demand. Market trading sentiment has been relatively sluggish. Overall, driven by profits, steel mills' production enthusiasm has not yet shown a significant decline. However, downstream demand has demonstrated insufficient resilience, and market confidence remains relatively low. It is expected that spot prices for construction materials will fluctuate downward in the short term.

Hot-Rolled Coil (HRC)

Yesterday, the HRC futures market weakened again, closing at 3,111 with a daily decline of 1.33%, hitting a new low. Spot prices continued to fall, with the mainstream HRC trading market declining by 10-50 yuan/mt. Given the significant decline in futures prices, downstream buyers maintained a strong wait-and-see attitude, resulting in generally poor overall market trading for the day. From the supply side, the impact of maintenance on hot-rolled production this week was 221,600 mt, down 52,600 mt WoW. Next week, the impact of maintenance on hot-rolled production is expected to be 141,500 mt, down 80,100 mt from this week. Supply has rebounded somewhat but remains at a low level YoY, with manageable pressure. From the demand side, market coil prices are relatively low, and the willingness to restock before holidays is poor. Coupled with the impact of the off-season, demand is gradually weakening. Current coil prices have hit a new low for the year, and the bottom is not yet clear. Market sentiment is currently low, with sparse trading. Additionally, as iron ore and coke prices gradually decline, cost support has weakened somewhat. However, it is worth noting that the current downturn in the steel market is not entirely due to supply and demand fundamentals themselves. The main reasons may also lie in environmental and informational influences. The industry chain has been consistently declining, coupled with sustained bearish sentiment and short-selling activities in funds and market participants, exacerbating capital game dynamics and leading to greater divergence in views on the bottom. Currently, the short-term market remains weak, and it is not advisable to buy the dip prematurely. Continuous attention should be paid to the subsequent SMM HRC supply-demand balance situation.