【Houthi Attacks on Saudi Refinery and Red Sea Port Raise Shipping Risks and Seaborne Coal Costs】

Iron ore futures were weak today. The DCE most-traded I2701 contract settled at 708.5 yuan/mt, down 1.60% from the previous session. Qingdao port spot prices fell 0-5 yuan/mt on average. Traders were moderately active and mills bought to cover immediate needs, with many staying on the sidelines. Spot trading was thin.

The most-traded HRC contract closed at 3,310 yuan/mt today, with futures in the doldrums and a full-day decline of 0.81%. In the spot market, HRC prices fell 10-20 yuan/mt MoM, CRC prices were in the doldrums, and intraday trading was on the soft side. Looking at HRC fundamentals, the impact from maintenance on HRC rolling lines decreased WoW this week, with rolling lines that had undergone concentrated maintenance resuming production one after another, leading to a rebound in overall HRC production. However, steel mills' willingness to conduct voluntary maintenance persisted, and with current profit losses constraining output, the pace of production recovery remained relatively moderate. Downstream end-users showed growing wait-and-see sentiment, as demand in the September peak season has yet to be fully verified, limiting transaction volumes. But manufacturing recovery expectations continued to build—the manufacturing PMI rebounded to 49.8% in August, with the new orders index back above the 50 mark. On the cost side, the fifth round of coke price increases has been implemented, and negotiations for the sixth round have begun. Coking coal supply still faces tightening expectations due to safety inspections, providing some cost support, but coking coal and coke futures led declines today, marginally weakening that support. Notably, Baosteel, Ansteel, and Bensteel Group all raised their October HRC base prices by 200 yuan/mt, signaling a clear stance from leading mills to hold prices firm. In summary, the HRC market is expected to adjust steadily this week, with the most-traded contract seen in the 3,280-3,390 yuan/mt range. Key factors to watch include the pace of peak-season demand verification, the implementation of the sixth round of coke price increases, and the sustainability of inventory destocking.

Shandong miners quoted 816 for 64-grade alkaline powder on a dry basis, pre-tax, acceptance, at mine mouth this week, down 4, with steel mills cutting in tandem. Despite occasional safety inspections, most miners maintained normal production. A few mines and beneficiation plants in Linyi halted operations again, and local mines and beneficiation plants showed relatively strong willingness to hold prices firm, while steel mills purchased actively.