[SMM Steel Morning Meeting Summary] Rebar futures rally boosts spot cargo to follow suit, but trading volume fails to keep up amid off-season demand

Domestic ore:

This week, Shandong miners reported a pre-tax acceptance price of 790 yuan/mt (dry basis) for 64-grade alkaline fines, a decrease of 7 yuan/mt. Steel mills followed suit with price reductions. Most miners maintained normal production, with inventories declining at most miners and some dropping to around 10,000 mt, easing shipping pressure. Small mills and traders primarily shipped goods in line with market conditions. However, the cost-effectiveness advantage of imported ore still exists, and the futures market fluctuated repeatedly, providing no strong support for domestic ore. Additionally, the recent trend of iron ore futures has been volatile. It is expected that the price of local iron ore concentrates will remain stable in the short term.

Imported ore:

Yesterday, the DCE iron ore futures market held up well, with the most-traded I2509 contract closing at 704.5, up 0.21% for the day. Traders showed moderate enthusiasm for shipping, while steel mills adopted a cautious wait-and-see attitude, with some conducting tenders. Market trading sentiment was generally flat. In the Shandong region, the mainstream transaction prices for PB fines were around 720-722 yuan/mt, unchanged from last Friday. In the Tangshan region, the transaction prices for PB fines were around 735-738 yuan/mt, also unchanged from last Friday. SMM's weekly shipping data showed that global iron ore shipments declined by 4% WoW last week, with decreases in total shipments from Australia, Brazil, and non-mainstream suppliers, but a slight increase in shipments from India. Port arrivals also fell by 4.76% synchronously. Shipment volumes in June have been hovering at a moderate level, with overall supply increases potentially falling short of expectations. In the short term, supply pressure is relatively small, and the supply-demand imbalance is minor, providing support for ore prices.

Coking coal:

The quoted price for low-sulphur coking coal in Linfen is 1,180 yuan/mt, and in Tangshan, it is 1,230 yuan/mt. Regarding the raw material fundamentals, most coal mines are operating normally, but some have halted production due to accidents, leading to a tightening in coking coal supply. However, the market is still in a downward phase, with strong bearish sentiment. Downstream buyers are cautious in their purchases, showing low willingness to actively restock. Overall trading sentiment is sluggish, and coal mine shipments have not improved. This week, coking coal prices may continue to face downward pressure.

Coke:

The nationwide average price for premium metallurgical coke (dry quenching) is 1,495 yuan/mt. The nationwide average price for quasi-premium metallurgical coke (dry quenching) is 1,355 yuan/mt. The nationwide average price for premium metallurgical coke (wet quenching) is 1,170 yuan/mt. The nationwide average price for quasi-premium metallurgical coke (wet quenching) is 1,080 yuan/mt.
In terms of supply, most coking plants have seen profit margins recover, maintaining stable production. Some coking plants have slightly reduced production due to losses and inventory accumulation, leading to a tightening in coke supply. On the demand side, steel mill profits remain moderate, with no large-scale maintenance occurring. There is a certain rigid demand for coke, but most steel mills' coke inventories are at medium to high levels, lacking restocking demand. Purchases are made as needed, with some steel mills with high coke inventories even controlling arrivals. In summary, the coke market is still in the doldrums, and there is an expectation for a fourth round of price reduction proposals for coke this week.

Rebar:

Yesterday, rebar futures fluctuated upward, closing at 2,990, up 0.98% from the previous trading day. In terms of spot prices, most markets saw a slight increase in quoted prices driven by rebar futures, with increases of 10-30 yuan/mt. Trading performance throughout the day was generally flat. From a fundamental perspective, on the supply side, the profit levels of blast furnace steel mills remain above 100 yuan/mt, and their production willingness is moderate. Some steel mills that underwent maintenance earlier have resumed production as planned. EAF steel mills face difficulties in scrap collection and are mostly operating at a loss, making it difficult to increase operating rates in the short term. The overall supply pressure for construction steel still exists. On the demand side, the plum rain season in the south and high temperatures in the north persist, hindering construction activities at some sites. End-users mostly purchase as needed, with market transactions concentrated on low-priced resources. Merchants are operating more cautiously. Overall, the supply-demand imbalance for construction steel is gradually accumulating, and market confidence is slightly lacking. However, considering the continuous "speculative news" about coking coal, which has driven up the futures market for coking coal and coke, providing bottom support for rebar futures and spot prices, it is expected that the price of construction steel will fluctuate rangebound in the short term.

HRC:

Yesterday, HRC futures prices rose by 1.07%, with the most-traded contract closing at 3,104. Trading sentiment in the spot market improved during the day, with HRC quotes in major cities increasing by 10-40 yuan/mt, and overall trading being relatively good. In terms of news, the Ministry of Ecology and Environment and other departments issued an announcement on regulating matters related to the import management of regenerated black mass raw materials and regenerated steel raw materials for lithium-ion batteries, mentioning that qualified regenerated steel raw materials are not classified as solid waste and can be freely imported. From a fundamental perspective, on the supply side, the impact of maintenance on hot-rolled production decreased this week, and HRC supply continued to increase. On the demand side, the arrival of hot and rainy weather, combined with the suspension of national subsidy policies for home appliances in multiple regions, is expected to have a certain impact on short-term home appliance sales. HRC demand still has seasonal weakness expectations. On the cost side, there is an expectation for coke prices to fall, while iron ore prices are largely stable. In summary, the supply-demand pressure for HRC is gradually emerging. It is expected that the most-traded contract will continue to fluctuate rangebound within the 3,000-3,150 interval in the short term.