[SMM Iron & Steel] Aditya Birla Group Restarts Iron Ore Trading Operations in India

Disturbed by raw material news, the most-traded HRC contract drifted lower today, closing at 3,218, down 0.92% intraday; spot prices mostly fell 20-30 yuan/mt. Fundamentals: supply side, hot-rolled production this week was 3.1783 million mt, up 15,200 mt WoW. With fewer steel mill maintenance outages, supply rebounded marginally. Demand side, the decline in futures spurred some low-price restocking, but given uncertainty over the outlook, purchasing growth was limited, and overall transactions weakened MoM. Cost side, daily average hot metal output at steel mills this week was 2.3584 million mt, up 6,400 mt WoW, a marginal improvement, but the absolute level remains low, limiting the push from the cost side on finished steel. News side, market talk today suggested that the long-term contract negotiations between China Mining and Rio Tinto have concluded. Expectations of incremental iron ore forward supply, combined with limited hot metal recovery, have caused negative feedback pressure to build along the industry chain. In summary, HRC inventory remains in a destocking channel, but performance is somewhat mediocre. The supply-demand pattern offers little favorable drive. Current sheets & plates valuations are already at low levels, so downside may be limited. The market still needs time to digest raw material supply disruptions. Near term, prices are expected to consolidate under pressure.