Short-term Volatility and Bottom Grinding in Ferrous Metals, Trend Remains Unchanged [SMM Steel Industry Chain Weekly Report]

Forecast for Next Week: Ferrous Metals Expected to Fluctuate While Bottoming Out in the Short Term, Trend Unchanged

This week, ferrous metals mostly showed an initial rise followed by a decline, with coking coal and coke performing weakly. Over the weekend, the Ministry of Ecology and Environment announced a one-month environmental protection check in the Beijing-Tianjin-Hebei region starting this week. Finished steel and raw materials performed differently, with iron ore showing strong support. In the latter part of the week, market rumors suggested that China is considering new property support policies, including options such as mortgage interest subsidies, causing some fluctuations in ferrous metals during trading. Fundamentally, inventories of the five major steel products continued to draw down but failed to provide strong support. Coupled with weakening raw material support, finished steel prices gave back Monday's gains. In the spot market, amid the off-season, end-users mainly purchased as needed at low prices, with a small amount of speculative demand released early in the week.

In the short term, according to the SMM survey, daily average hot metal production fell by 2,000 mt WoW. Large-scale maintenance at steel mills has not yet emerged recently, limiting the extent of future declines in hot metal production, so support from the raw material side remains effective. For steel products, inventories of the five major steel products continue to draw down, but the characteristics of the off-season are apparent, making it difficult to exceed expectations. Overall, the short-term market trading logic remains fundamentals-driven. Coking coal, amid delivery arbitrage in the short term, is dragging down finished steel performance, but there is also pressure against further deep declines. Meanwhile, finished steel lacks upward momentum on its own. Therefore, finished steel is expected to continue fluctuating near the bottom next week.

Iron Ore: Prices Held Up Well, May Fluctuate in a Narrow Range with a Weak Bias Next Week

This week, iron ore prices showed a strong trend, with the price center edging up slightly. Fundamentally, hot metal production has not seen a significant pullback. SMM statistics show that daily average hot metal production only decreased slightly by 2,000 mt WoW. Most steel mills postponed or canceled blast furnace maintenance plans, supporting resilient iron ore demand. Looking ahead to next week, global iron ore shipments and port arrivals are expected to increase slightly, with ongoing supply pressure. On the demand side, some steel mills are still advancing blast furnace maintenance plans, and intensified environmental protection checks may lead to a new round of production restrictions in north China. Hot metal production is expected to pull back further, weakening iron ore fundamentals. Prices may continue fluctuating in a narrow range with a weak bias next week.

Coke: Supply-Demand Imbalance Eased Somewhat, Market May Stabilize Temporarily Next Week

Supply side, coke plant profitability improved somewhat, operating rates rebounded slightly, and shipments were relatively good, with most coke plants maintaining low inventory levels. Demand side, steel mill profit recovery fell short of expectations, and with some mills having replenished coke inventories to reasonable levels, procurement demand for coke weakened, leading to controlled purchasing. On the raw material fundamentals, coal mines faced production constraints due to safety inspections and environmental protection checks, but recent gradual production resumptions have increased output. Coupled with more failed online auctions, market pessimism grew. Coking coal prices are expected to decline next week. To sum up, the supply-demand imbalance in the coke market has eased somewhat, and the coke market may stabilize temporarily next week, though a price cut cannot be ruled out.

Steel Scrap: Strong Wait-and-See Sentiment, Prices Unlikely to Improve in the Short Term

Supply side, rebar futures were in the doldrums this week, market panic sentiment intensified, and merchants significantly increased their willingness to sell to avoid potential risks from price fluctuations, resulting in steel mills receiving arrivals at relatively high levels for multiple days. Demand side, end-use demand release in the finished steel market fell short of expectations, market transactions were relatively mediocre, and steel mills still faced certain operational pressures. Against this backdrop, steel mills adopted a cautious purchasing strategy for raw materials like steel scrap, with a clear intention to drive down prices. Overall, the current market wait-and-see sentiment is strong, and steel scrap prices are expected to remain in the doldrums until steel mill profits show significant improvement.

Rebar: Lack of Intrinsic Momentum, Continues to Follow News-Driven Fluctuations

This week, rebar prices showed a fluctuating upward trend, with the nationwide average spot price at 3,116 yuan/mt, up 25 yuan/mt WoW. Supply side, EAF steel mills saw improved profitability, leading to increased operating hours this week, though most maintained production during off-peak electricity periods, leaving limited room for further increases. Blast furnace steel mills gradually arranged annual maintenance plans, but some mills in north China resumed production in phases, leading to a temporary rebound in output, though a reduction is expected in the long term. Demand side, trading activity improved noticeably early in the week stimulated by market conditions, but as futures weakened, downstream buyers mainly purchased as needed, resulting in generally mediocre overall transactions. Inventory side, both mill and social inventories continued to destock this week, with the destocking speed accelerating. Regional inventory performance varied significantly: northeast China faced phased inventory accumulation pressure, while southwest and north China saw better destocking, with resources flowing out to east China. Looking ahead, short-term supply pressure has eased compared to earlier, coupled with ongoing destocking, fundamentals are relatively healthy. However, the market is dragged down by seasonal demand weakness and high social inventory levels YoY, resulting in weak intrinsic momentum. Spot prices are likely to maintain a sideways movement.

Hot Rolled Coil: Demand Still Present, Limited Downside Room for Prices Next Week

This week, hot rolled coil prices moved downwards after a higher opening, with the price center shifting slightly upward, and overall transaction activity improved. In terms of supply, steel mill profits continued to decline this week, but some mills completed maintenance on hot rolling lines, leading to an increase in hot rolled coil production. Demand side, market demand showed some improvement this week, with weekly apparent consumption of hot rolled coil continuing to rise. Inventory side, SMM statistics for 86 warehouses nationwide (large sample) showed social inventory of hot rolled coil at 4.235 million mt, down 99,100 mt WoW, a decrease of 2.29% WoW. National social inventories continued to decline this week, with the rate of decrease expanding. Cost side, the fourth round of coke price increases was implemented last Saturday, and iron ore prices rose slightly, strengthening cost support for hot-rolled coil. Looking ahead, coke prices are expected to hold steady next week with limited immediate downside room, while iron ore prices face downward expectations. Hot-rolled coil costs may see a slight decline, but demand is stronger-than-usual off-season, providing support to prices. Downside room for hot-rolled coil prices is limited, and the most-traded contract is expected to trade in the range of 3,220–3,300 next week.

1. For data referenced in this report, please log in to the SMM database (

2. For more SMM steel news, analysis reports, databases, and other content, please contact Li Ping of the SMM Steel Division at 021-51595782.

*The views in this report are based on market-collected information and comprehensive evaluation by the SMM research team. The information provided in the report is for reference only, and investors assume their own risks. This report does not constitute direct investment research advice. Clients should exercise caution in decision-making and not use it to replace independent judgment. Any decisions made by clients are unrelated to SMM. Additionally, SMM is not liable for losses or responsibilities resulting from unauthorized or illegal use of the views in this report.

SMM reserves the right to modify and ultimately interpret the terms of this statement.