[SMM Steel Market Morning News] Pig iron production continues to decline & the second round of coke price cuts takes effect

★Macro★

01 ★★ 

Ministry of Finance: New Local Government Bonds Issued Nationwide Totaled 1,492.7 Billion Yuan from January to April

According to data from the Ministry of Finance, from January to April 2025, new local government bonds issued nationwide totaled 1,492.7 billion yuan, including 302.3 billion yuan in general bonds and 1,190.4 billion yuan in special bonds.
Refinancing bonds issued nationwide amounted to 2,042.7 billion yuan, including 248.6 billion yuan in general bonds and 1,794.1 billion yuan in special bonds. The total issuance of local government bonds nationwide reached 3,535.4 billion yuan, including 550.9 billion yuan in general bonds and 2,984.5 billion yuan in special bonds. As of the end of April 2025, the balance of local government debt nationwide stood at 50,693.1 billion yuan, including 17,069.2 billion yuan in general debt and 33,623.9 billion yuan in special debt. Government bonds accounted for 50,532.7 billion yuan, while non-government bond forms of government debt totaled 160.4 billion yuan.

02 ★★ 

China Expands Visa-Free Entry to More Countries

To further facilitate international exchanges, China has decided to expand the range of visa-free countries. From June 9, 2025, to June 8, 2026, citizens holding ordinary passports from Saudi Arabia, Oman, Kuwait, and Bahrain can enter China for business, tourism, family visits, exchanges, or transit for up to 30 days without a visa. Those not meeting the visa-free conditions must still obtain a visa before entering China.

★Industry and Downstream★

01★★★  

Steel Industry Profits Reached 16.92 Billion Yuan from January to April

From January to April, the total profit of the ferrous metal smelting and rolling processing industry was 16.92 billion yuan. From January to March, the total profit was 7.51 billion yuan, indicating that the steel industry earned 9.41 billion yuan in April.

02★★ 

[SMM Blast Furnace Operating Rate] Some Steel Mills Report Losses, Pig Iron Production Continues to Decline

According to an SMM survey, as of May 28, the blast furnace operating rate of 242 surveyed steel mills was 88.35%, down 0.06 percentage points WoW. The blast furnace capacity utilisation rate was 89.74%, down 0.34 percentage points WoW. The daily average pig iron production of the sample steel mills was 2.4213 million mt, down 9,000 mt WoW.

During this period, no blast furnaces were under maintenance, while two blast furnaces resumed production. The resumed blast furnaces were mainly located in Jiangxi and Hebei. Recently, some steel mills reported overall profit losses and plan to schedule maintenance after the Dragon Boat Festival. Looking ahead, according to SMM tracking, three blast furnaces are scheduled for maintenance, and one blast furnace is planned to resume production. The blast furnaces under maintenance are mainly in Guizhou and Hebei. If finished steel prices continue to weaken, steel mill profits will be under pressure, potentially leading to increased temporary maintenance. Pig iron production may fall short of expectations in the future.

03★★★

Second Round of Coke Price Cuts Implemented

Large steel mills in Hebei reduced coke procurement prices, with wet quenched coke prices down by 50 yuan/mt and dry quenched coke prices down by 55 yuan/mt. The adjusted prices are as follows:

Grade 1 wet quenched coke (A≤12.5, S≤0.7, CSR≥65, MT≤7): 1,410 yuan/mt;

Grade 1 dry quenched coke (A≤12.5, S≤0.7, CSR≥65, MT≤0): 1,625 yuan/mt.

All prices are factory-delivered, tax-included, and effective from 00:00 on May 28, 2025.

04★★★

Brazil Extends Import Quota Duration and Product Range

The Brazilian Foreign Trade Commission has decided to extend the steel import quota measures by one year, maintaining the tax rate within the quota at 9%-16%, while imposing a 25% tariff on amounts exceeding the quota. Additionally, four new products have been added to the import quota list, increasing the restricted items from 19 to 23.

05★★★

[SMM Steel Downstream PMI Brief] Downstream Production Weak, Steel Demand Remains Soft

In May 2025, the composite PMI was 49.81, down 0.48 MoM and 0.27 YoY. Seasonally adjusted, the composite index was 48.94, down 0.14 MoM and 0.05 YoY.

Overall, this month, factors such as the Labour Day holiday, weather, and the off-season in certain industries slowed production and construction activities, leading to weak overall steel demand. The composite production index for the month was 49.49, down 1.64 MoM and 0.79 YoY. The new orders index was 49.70, down 0.26 MoM and 0.36 YoY.

★Other Hot Topics★

⭕[Hefei Extends Housing Subsidy Policy to May 14, 2026]The Hefei Housing Security and Real Estate Administration Bureau issued a notice on matters related to the housing subsidy policy. The notice states that from May 15, 2025 (inclusive, the same hereinafter), to May 14, 2026 (based on the online signing and filing date), buyers of newly built commercial housing or parking spaces (garages) in Hefei will continue to receive housing subsidies as per the "Notice on Further Adjusting and Optimizing Real Estate Policy Measures" (Hefei Real Estate Joint Office [2024] No. 4). The subsidy funds will be disbursed after obtaining the property ownership certificate.

⭕[Fujian: Promote "Housing Ticket Resettlement," "Shared Ownership," and "Trade-In" Policies for Housing]The General Office of the Fujian Provincial Government issued the "Implementation Plan for Special Actions to Boost Consumption in Fujian Province," which includes measures to promote housing consumption. Policies such as "housing ticket resettlement," "shared ownership," and "trade-in" for housing will be promoted. Local governments are encouraged to introduce "housing subsidies" and "housing consumption vouchers" where conditions permit. Efforts will be made to explore multi-entity acquisition models, supporting the purchase of existing commercial housing for use as student dormitories, community elderly care service housing, employee dormitories, migrant worker housing, talent housing, and youth apartments. The plan also emphasizes accelerating urban village and dilapidated housing renovation, with 5,000 urban village renovation projects and 45,000 old urban residential units to be started in 2025. The scope of housing provident fund usage will be expanded, supporting its withdrawal for old elevator upgrades and promoting policies for withdrawing provident funds to pay down payments for second-hand housing purchases. Measures for flexible employment personnel to deposit and use housing provident funds will be introduced, with pilot work for flexible employment personnel deposits to be advanced in Zhangzhou.

⭕[Fujian: Support Auto Consumption Promotion Activities with Additional Car Purchase Incentives]The General Office of the Fujian Provincial Government issued the "Implementation Plan for Special Actions to Boost Consumption in Fujian Province," which includes measures to support auto consumption. Efforts will be made to promote auto modification, rental, events, exhibitions, RV camping, and classic car consumption in the automotive aftermarket. Local governments are encouraged to cultivate and expand used car business entities, promote "reverse invoicing" for used car sales, and accelerate the transition from brokerage to dealership models for used cars. Auto consumption promotion activities will be supported with additional car purchase incentives. By the end of 2025, the province aims to have built over 80,000 public charging piles, achieving full coverage of public charging facilities in all towns.

⭕[Third Round, Fourth Batch of Central Ecological and Environmental Protection Inspections Fully Deployed]On the afternoon of May 28, 2025, the Central Second Ecological and Environmental Protection Inspection Team held a mobilization meeting in Hohhot, Inner Mongolia. With this, all eight inspection teams of the third round, fourth batch of central ecological and environmental protection inspections have been deployed. The inspection period is one month. During this time, each inspection team will set up dedicated hotlines and postal addresses to receive complaints and reports related to ecological and environmental protection from the inspected entities. The hotline will be available daily from 8:00 to 20:00. All team members will strictly adhere to disciplinary requirements and accept supervision from the inspected entities and society. In subsequent work, the teams will strictly implement central requirements, further reduce burdens on grassroots entities, simplify procedures, optimize processes, and continuously improve the precision and relevance of inspection work to ensure orderly and effective completion of inspection tasks.

⭕[Fujian to Experience the Strongest Rainfall of the Year]According to the Fujian Meteorological Observatory, the strongest rainfall of the year will occur in Fujian over the next two days (May 28 and 29). The China Railway Nanchang Bureau activated a Level 4 flood emergency response yesterday for sections of the Hefei-Fuzhou High-Speed Railway, Fuzhou-Xiamen High-Speed Railway, and Xingguo-Quanzhou Railway, suspending passenger trains between Fuzhou and Luoyang, Chongqing North, Songxi, and other destinations from May 28 to 29.

⭕[Dongkuk Steel Further Reduces Operating Rate to Address Market Conditions] According to local media in South Korea, due to declining demand caused by the construction industry downturn, South Korean steel producer Dongkuk Steel will suspend rebar production at its Incheon plant from July 22 to August 15, reducing production by an estimated 200,000 mt. The Incheon plant has an annual rebar capacity of 2.2 million mt, accounting for approximately 40% of Dongkuk Steel's sales.

Dongkuk Steel stated that despite reducing its capacity utilisation rate to 50% and switching to nighttime operations to lower costs, it can no longer maintain normal production operations due to long-term supply surplus issues and rising costs such as electricity. The company will monitor market conditions and may extend the suspension period if the supply surplus persists.

⭕[Shanghai DHX Group to Build First Galvanized Sheet Plant in Saudi Arabia]The plant is expected to have an annual capacity of 400,000 mt and is being developed in collaboration between Al-Watania for Industries and Shanghai DHX Group. The new plant will be located in Ras Al-Khair Industrial City on Saudi Arabia's east coast and is expected to commence commercial operations in mid-2027.

⭕On May 28, Shagang announced its sales discount plan for construction materials in June 2025: rebar at 0.5% (down from 4% last month) and coiled rebar at 0% (unchanged from last month).

⭕For the 6-1 phase of June 2025, Zenith Steel's construction material discount plan for east China is as follows: rebar at 5% (unchanged from the previous phase), wire rod at 6% (down from 6.5% in the previous phase), coiled rebar at 6% for Jiangsu and Shanghai and 4% for Zhejiang (down from 6.5% for Jiangsu and Shanghai and 5% for Zhejiang in the previous phase).

⭕[Ningbo HRC Inventory Slightly Accumulated This Week] This week, Ningbo's large-sample HRC inventory was 298,100 mt, up 6,700 mt WoW, an increase of 2.3%, with a YoY decline of 24.4%.

⭕[Hangzhou Inventory Down 4.93% WoW] This week, Hangzhou's inventory was 714,000 mt, down 37,000 mt WoW, a decrease of 4.93%.

⭕[SMM Xi'an Construction Material Inventory] Market Arrivals Decreased, Inventory Continued to Decline. As of May 28, Xi'an's total construction material inventory this week was 416,000 mt, down 7,000 mt WoW, a decrease of 1.65%.

⭕[SMM Guiyang Construction Material Inventory] Market Demand Weak, Inventory Slightly Increased. As of May 28, Guiyang's total construction material inventory this week was 57,100 mt, up 3,700 mt WoW, an increase of 6.94%. Among them, rebar inventory was 36,000 mt, up 4,700 mt WoW, while wire rod inventory was 21,100 mt, down 1,000 mt WoW.

⭕[SMM Lecong HRC Inventory] Increased Arrivals, Inventory Slightly Accumulated. This week, Lecong's HRC inventory was 64.46 mt, up 14,300 mt WoW, an increase of 2.27%, with a YoY decline of 310,600 mt, a decrease of 32.52%.

⭕[SMM Shenyang HRC Inventory] This week, Shenyang's HRC inventory was 107,500 mt, up 8,500 mt WoW, an increase of 8.59%. YoY, it decreased by 65,200 mt, a decline of 37.75%.

⭕[SMM Shanghai HRC Inventory] This week, Shanghai's inventory continued to decline. Shanghai's HRC inventory this week was 278,800 mt, down 16,800 mt WoW, a decrease of 5.68%. YoY, it decreased by 33.35% on the Gregorian calendar and 32.64% on the lunar calendar.

⭕[SMM Beijing Construction Material Inventory] Inventory Depletion Slowed Slightly This Week. As of May 27, Beijing's main inventory was 391,500 mt, down 42,100 mt WoW, a YoY decrease of 9.71%, with inventory depletion slowing slightly.