[SMM Steel Morning Meeting Summary] Fundamental contradictions are not yet acute; ferrous metals series may fluctuate at highs in the short term

Domestic ore:

Prices of iron ore concentrates in Tangshan edged up, with the delivery-to-factory price of 66-grade iron ore concentrates (dry basis, tax included) rising by 20 yuan to 880-885 yuan/mt. Mines and beneficiation plants still face tight overall supply of iron ore concentrates, and the cost-performance ratio of domestic ore has improved compared to imported ore, leading to moderate willingness to sell. Demand side, steel mills currently maintain decent profits but mostly purchase as needed, with strong desire to bargain down prices, reflecting evident market game mentality. Given the recent upward trend in iron ore futures, local iron ore concentrate prices may have some room to rise in the short term.

Imported ore:

Last Friday, DCE iron ore futures jumped initially and then pulled back, continuing to hold up well throughout the day. The most-traded contract I2509 finally settled at 732.5, up 0.62% daily. Traders actively sold cargoes. Steel mills purchased as needed, with inquiries tapering off approaching the weekend. Market trading atmosphere was moderate. In Shandong, mainstream transaction prices of PB fines were around 720-725 yuan/mt, basically stable from the previous trading day; in Tangshan, PB fines traded around 735-740 yuan/mt, also basically stable.
Next week, the iron ore market is expected to maintain upward fluctuations. Although overseas shipments pushing for target at quarter-end will drive further rebound in port arrivals, increasing supply-side pressure, demand remains resilient, with decent steel mill profits supporting high pig iron production. Coupled with limited industrial contradictions, price support at lower levels remains solid. Additionally, market sentiment stays optimistic amid positive news, suggesting ore prices may extend their strength, but close attention should be paid to potential short-term disruptions from policy news like tariff negotiations.

Coking coal:

Low-sulphur coking coal in Linfen was quoted at 1,180 yuan/mt, while Tangshan low-sulphur coking coal was offered at 1,200 yuan/mt. Raw material fundamentals remain tight as safety inspections stay stringent, with partial mine suspensions in some regions. Recent coking coal market transactions improved, with online bidding turning active. Coal inventory at mines declined slightly, easing sales pressure and strengthening price resilience. Short-term coking coal prices are expected to stabilize, with some oversold grades seeing minor upward adjustments.

Coke:

Nationwide average prices: first-grade metallurgical coke (dry quenching) at 1,440 yuan/mt; quasi-first-grade (dry quenching) at 1,300 yuan/mt; first-grade (wet quenching) at 1,120 yuan/mt; quasi-first-grade (wet quenching) at 1,030 yuan/mt.
Supply side, restricted by losses and environmental protection inspections, coke producers faced output limits, with some maintaining production cuts. However, downstream purchases increased, leading to continued inventory drawdowns. Demand side, boosted by stronger futures and rising steel prices, steel mill profits improved, with blast furnace pig iron production staying high, sustaining coke procurement demand. Overall, coke fundamentals gradually improved, with stable cost support. Short-term coke prices may stabilize, with some upward potential.

Rebar:

Last week, rebar prices fluctuated upward, with the nationwide average at 3,118.6 yuan/mt, up 57.4 yuan/mt WoW. Supply side, blast furnace steel mills maintained profit levels, with multiple mills sustaining construction steel output. However, following signals from the Central Financial Commission to curb cut-throat competition, some mills in Yunnan and Guizhou initiated production cut plans, though implementation remains uncertain. A few EAF mills resumed production as planned, slightly raising the operating rate, but overall mill losses persist, suggesting rates will stay mid-to-low short-term. Demand side, boosted by rising prices, market activity improved this week, but seasonal off-season pressures will likely drag down future transactions. Inventory-wise, while in-plant stock transfers to social inventory accelerated, total inventory kept declining without obvious accumulation. Reportedly, recent macro news spurred rapid spot price hikes, but merchants generally reported difficulty selling high-priced resources, with poor price stability. As hype fades, bottom support may weaken. Overall, profit-driven blast furnace output cuts remain limited, while off-season demand disappoints, keeping fundamental issues. Caution is warranted against rebar spot prices pulling back after initial spikes, with RB2510 likely fluctuating between 2,980-3,130.

HRC:

Last Friday, HRC futures fluctuated rangebound, with the most-traded contract settling at 3,201, up 0.25% daily. Spot market, prices were in the doldrums, with weakening trading atmosphere. Daily trading volume pulled back from the previous day, as end-user purchase willingness stayed low. News-wise, US President Trump proposed tariffs ranging 60%-70% and 10%-20% for different countries, effective August 1. Fundamentally, HRC maintenance impact further declined this week, with production up 2,900 mt WoW to 3.3685 million mt weekly, gradually highlighting supply pressure. Demand side, home appliance and auto orders slowed, with operating rates dipping. Coupled with sluggish cold-rolled orders and weakening structural steel demand, off-season effects intensified. While the futures rally boosted speculative trading, actual demand improved marginally, with downstream buyers purchasing as needed. Cost side, strong iron ore and weak-but-stable coke provided short-term support. Overall, HRC inventory kept accumulating with expanding increments, as supply-demand imbalance persisted. Upcoming maintenance at North China mills may slightly ease supply pressure, but strong market expectations for the July Politburo meeting warrant caution against post-sentiment pullbacks. This week’s most-traded contract may fluctuate between 3,150-3,270.