[SMM Steel Morning Meeting Summary] HRC futures and spot prices were mostly stable with individual declines during the day, and overall trading performance was moderate

Domestic Ore:

The domestic ore market in Tangshan remained mostly stable. The dry-basis, tax-inclusive delivery-to-factory prices of 66-grade iron ore concentrates were in the range of 880-890 yuan/mt. Despite the fourth round of coke price reductions, steel mills still had a strong desire to bargain down prices. Producers lacked confidence in steel mills' price increases and had limited room for operation, resulting in a lack of inquiries and purchases. Mines and beneficiation plants were mostly operating normally and had a pessimistic outlook on the future market. The current market circulation resources remained relatively tight. It is expected that the local iron ore concentrate prices will remain in the doldrums in the short term.

Imported Ore:

Yesterday, the iron ore futures market was in the doldrums throughout the day, with the most-traded I2509 contract closing at 702.5, down 0.43% for the day. Traders had a moderate willingness to sell. Steel mills were cautiously observing the market, with a moderate amount of low-level inquiries. The market trading atmosphere was moderate. In the Shandong region, the mainstream transaction prices of PB fines were around 700 yuan/mt, basically stable compared to previous prices. In the Tangshan region, the transaction prices of PB fines were around 710-715 yuan/mt, also basically stable compared to previous prices. According to the SMM survey, on June 25, the blast furnace operating rate of 242 steel mills surveyed by SMM was 87.96%, up 0.26 percentage points MoM. The daily average pig iron production of the sampled steel mills was 2.4179 million mt, up 9,500 mt MoM. This week, the focus was on blast furnace production resumptions. Looking ahead to next week, with profits expanding, there are still plans for blast furnaces to resume production, and pig iron production is expected to remain high in the short term, providing support for ore prices. Considering the high production background, the weakening of end-use consumption, and the potential turning point in the inventory of the five major steel products, the pressure on ore prices is unlikely to ease. Overall, in the short term, ore prices are facing difficulties in both rising and falling, and will continue to fluctuate at lows.

Coking Coal:

The quoted price of low-sulphur coking coal in Linfen was 1,180 yuan/mt. The quoted price of low-sulphur coking coal in Tangshan was also 1,180 yuan/mt. Regarding the raw material fundamentals, the safety inspection situation remained strict, leading to a slight tightening of coal mine production. Online auctions showed mixed performance, with the rate of unsold lots further decreasing. However, due to losses in coking enterprises, their acceptance of high-priced coal types was low, and the prices of these coal types may continue to decline, while the prices of other coal types will remain stable for the time being.

Coke:

The nationwide average price of premium metallurgical coke (dry quenching) was 1,440 yuan/mt. The nationwide average price of high-grade metallurgical coke (dry quenching) was 1,300 yuan/mt. The nationwide average price of premium metallurgical coke (wet quenching) was 1,120 yuan/mt. The nationwide average price of high-grade metallurgical coke (wet quenching) was 1,030 yuan/mt. In terms of supply, most coking enterprises were operating at a loss, leading to voluntary production cuts and a certain decline in the actual supply of coke. In terms of demand, steel mills' profitability was moderate, providing support for the rigid demand for coke, and steel mills' control over arrivals had decreased. In summary, the fundamental contradictions in the coke market have eased recently, coupled with the fact that cost support is no longer weakening. The coke market may stabilize in stages this week.

Rebar:

Yesterday, rebar futures fluctuated rangebound, closing at 2,976, down 0.33% from the previous trading day. Spot prices across regions fell by 10-30 yuan/mt, with overall trading activity remaining weak. On the supply side, according to the SMM survey, the national operating rate of electric furnaces this week was 31.38%, up 0.4% WoW. Currently, the operating conditions of electric furnace plants vary by region. Some electric furnace plants in South China reduced production earlier, leading to insufficient order fulfillment, and have extended their operations this week to ensure delivery. Electric furnace plants in East China, Central China, and south-west China are facing poor profitability, with one plant halting production for maintenance and three plants shortening their operating hours this week. On the demand side, the off-season demand weakness persists, with hot and rainy weather constraining downstream construction activities. Terminal purchases are mainly driven by immediate needs, with low speculation. Overall, the current weak balance in the steel market continues, and it is expected that building material prices will continue to fluctuate rangebound in the short term.

HRC:

Yesterday, HRC futures fluctuated rangebound, with the 05 contract closing at 3,098, down slightly by 0.26%. In the spot market, prices were mostly stable with some declines, and overall trading performance was moderate. In terms of data, HRC inventory figures for some mainstream cities were released. This week, Shanghai's HRC inventory was 256,000 mt, down 23,300 mt WoW, a decrease of 8.34%. This week, Lecong's HRC inventory was 68.71 mt (Note: likely a typo in the original, should be 687,100 mt or similar), up 20,300 mt WoW, an increase of 3.04%. This week, Shenyang's HRC inventory was 200,000 mt, up 25,000 mt WoW, an increase of 14.29%. Looking ahead, it is expected that the turning point for HRC inventory buildup may occur within the next two weeks. The accumulation of fundamental contradictions in the short term is relatively slow, and there is still support below. Considering the lack of macroeconomic news stimulation, it is expected that the 05 contract will continue to fluctuate rangebound within the 3,060-3,150 range in the short term.