Domestic ore:
In the market for domestic ore in western Liaoning, transactions have been weak, with prices experiencing a slight downward fluctuation. The ex-factory price (excluding tax) for 66-grade iron ore concentrates on a wet basis is 680-690 yuan/mt. Local raw ore resources are scarce, with most mine resources being supplied to their own beneficiation plants. Local independent beneficiation plants face difficulties in externally purchasing raw ore, resulting in relatively high procurement costs. Additionally, given the current weak market conditions, a small number of producers have chosen to halt production for maintenance due to low profit margins from sales. On the demand side, some local steel mills are experiencing negative profit margins and are primarily purchasing iron ore as needed. Overall market transactions have been weak. In other news, the market has heard that preliminary agreement has been reached in the China-US negotiations, boosting market confidence. Yesterday, the iron ore futures market rebounded, which may drive up the prices of local domestically produced iron ore. In the short term, it is expected that there will be some upward potential for the prices of local iron ore concentrates.
Coking coal:
On the raw material fundamentals front, some coal mines have halted production, while most are operating normally. Downstream purchasing enthusiasm is relatively weak, with coal mines receiving fewer new orders. The market still holds a bearish sentiment, and the atmosphere for purchasing is generally cautious, with a wait-and-see approach prevailing. Against the backdrop of the traditional consumption off-season for steel demand, coking coal prices will continue to face downward pressure in the short term.
Coke:
In terms of supply, some coking enterprises have slightly cut production due to losses and inventory pressure, but most have seen profit margins recover, with production remaining stable for the time being. On the demand side, steel mills' coke inventories are at a medium to high level, and the finished steel market is significantly affected by the off-season, leading steel mills to maintain a cautious purchasing attitude and control the arrival of goods. In summary, the cost support for coke has further loosened, and downstream demand has weakened. In the short term, coke prices may continue to face downward pressure.
Rebar:
Yesterday, positive signals were released on the macro front. The agreement framework reached in principle during the China-US London business talks boosted market sentiment, causing the futures market to trend upwards. In the spot market, most market quotes increased, with gains ranging from 10-30 yuan/mt. Overall trading performance throughout the day was average.
From a fundamental perspective, on the supply side, blast furnace steel mills are still generating profits, but influenced by news of crude steel production cuts and the transition to the off-season in demand, individual steel mills have gradually arranged production cut or halt plans. In the short-process sector, according to an SMM survey, the operating rate of 50 electric furnace steel mills across the country that mainly produce construction materials is 34.64%, down 3.78% MoM from the previous period. The daily average production of construction materials is 82,700 mt, a decrease of 5,600 mt MoM, indicating a significant reduction in overall supply. On the demand side, downstream end-users are still primarily purchasing as needed. Driven by favourable macro news yesterday, market trading sentiment improved, stimulating the release of some speculative demand. In summary, the fundamentals of construction materials have not changed significantly at present. Short-term prices are likely to fluctuate in line with macro expectations. It is expected that construction material prices will continue to hold up well tomorrow, but attention should also be paid to sentiment changes caused by the realization of macro news.
HRC
Yesterday, the most-traded HRC contract first rose and then fell. The 2510 contract closed at 3108 at the end of the session, up 0.77% MoM. Spot prices rose slightly. In terms of supply, the impact from maintenance of hot-rolled coil production this week was 172,600 mt, a decrease of 35,800 mt WoW. The impact from maintenance of hot-rolled coil production next week is expected to be 158,800 mt, a decrease of 13,800 mt WoW. Supply pressure continued to rebound. On the demand side, market sentiment was significantly influenced by the futures market, with slightly better sales at lower prices. Overall, purchasing as needed was the main approach. In terms of raw materials, pig iron production may continue to decline in the short term, slightly weakening the cost support for HRC. Overall, the China-US talks may release optimistic signals. However, on the whole, even if the talks are optimistic, their impact on steel will be more of an emotional boost, with limited actual effects. Meanwhile, inventory has accumulated in some mainstream cities. In June, HRC may gradually show a pattern of increasing supply and decreasing demand. After the emotional boost fades, it is expected that HRC prices will peak and pull back in the short term. It is recommended to focus on selling at highs.
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