Forecast for Next Week: Cost Hikes to Continue Driving Prices Up, Rebar Price Center May Edge Up Next Week
This week, ferrous metals moved sideways on a strong note overall, with slight differences among varieties. Coking coal and coke were the strongest, while iron ore and finished steel saw relatively limited gains. During the week, safety supervision remained stringent, coal mine production resumption pace fell short of expectations, structural shortage of key coal types deepened, and coking coal futures kept rising; coke enterprises suffered heavy losses, production enthusiasm was dampened, production cuts expanded, and both coke futures and spot prices strengthened simultaneously. Cost support shifted up, driving finished steel futures to drift higher. On the iron ore side, the strike incident at Port Hedland continued to ferment, lending some boost to market sentiment, but high inventory at ports capped upside room, and the overall trend was a consolidation pattern. On the spot side for finished steel, the mid-week futures rise released some speculative demand, but overall downstream terminals primarily made purchases based on rigid demand, spot prices for rebar and hot-rolled coil lacked upward momentum, and most traders chose to sell in volume at low prices.
Looking ahead to next week, on the raw material side, coal mine production resumption pace remains constrained by safety inspections, the shortage of high-quality key coal resources is unlikely to resolve in the short term, and coking coal prices are expected to hold up well; the supply-demand imbalance for coke continues to ease, and there may be a new round of price hike expectations; iron ore's fundamentals are insufficient to support it, and it is likely to consolidate on a subdued note. On the finished steel side, approaching September, the market is gradually shifting from off-season to peak season, and end-use demand may see marginal improvement.Overall, steel prices next week may gradually stabilize amid cost hikes. If the coke price hike materializes, steel mills' loss pressure could widen, leading to increased maintenance, providing an opportunity for a rebound.
Iron Ore: Support Below and Pressure Above, Iron Ore Prices in a Dilemma
This week, iron ore prices continued to drift higher, with the most-traded contract I2701 briefly hitting 721 yuan/mt intraweek. The main driver of this rise remained news-driven—the BHP Port Hedland worker labor negotiation stalemate sparked concerns about tight supply of mid-grade iron ore. On the fundamentals side, supply showed a mix of bullish and bearish factors: overseas mine shipments rebounded as expected, but due to typhoon weather, port arrivals this week plunged 37% WoW, inventory at ports declined slightly, and supply pressure eased temporarily. Demand side was mild to slightly positive, with hot metal production edging up, and improved steel product orders in some regions boosted spot purchase willingness marginally. Overall iron ore demand edged up, market trading volume increased, lending some support to ore prices.
Looking ahead to next week, iron ore prices may continue to move sideways in a narrow range. Fundamentals are under pressure: overseas mine shipments maintain slight growth, and after the typhoon impact subsides, previously backlogged vessels will lead to concentrated arrivals, with port arrivals expected to rebound sharply. Meanwhile, demand has not yet entered the peak season, so hot metal production is unlikely to see notable growth. With a supply-strong, demand-weak pattern, ore prices face downward pressure. In addition, next week there are expectations of a coke price hike, which may temporarily raise cost pressure on steel mills, curbing their enthusiasm for iron ore purchases. However, support factors also exist below: the risk of a strike at BHP Port Hedland and the long-term contract negotiation have not yet been finalized, and market concerns about limited availability of mid-grade resources persist. Moreover, with the National Day holiday approaching, trade in USD-denominated forward cargo may improve, lending some support to overseas futures prices. With multiple bullish and bearish factors contending, ore prices have support below and pressure above,and are expected to move sideways in a range next week.
Coke: Cost Support Continues to Strengthen, Coke Market to Hold Up Well Next Week
On the supply side, coke enterprises' losses have further widened, leading to increased and expanded voluntary production cuts, with actual coke output declining continuously. Meanwhile, downstream procurement demand has increased, and previously accumulated inventory is being steadily drawn down. On the demand side, steel product prices have been consolidating on a strong note recently, while blast furnace maintenance at steel mills has wrapped up, gradually boosting daily average hot metal production and increasing rigid coke consumption. Some steel mills have started to release restocking demand, accelerating procurement pace. On the coking coal side, coal mine production resumption remains constrained by stringent safety supervision, supply stays tight, most coal mines have low inventory, the structural shortage of high-quality resources persists, and online auctions see both low bid rejection rates and premium transactions. Next week, the coking coal market is likely to continue to hold up well.In summary, the coke market will hold up well next week, with expectations of the first round of coke price hike materializing.
Steel Scrap: Supply-Demand Weakness on Both Sides Cannot Dominate Trend, Prices Likely to Fluctuate with Ferrous Metals Trend
On the supply side, this week, with finished steel prices holding firm and occasional bottom-out trends, the steel scrap raw material supply side had some price hike sentiment, leading to a decline in processing yard purchase volume, and short-term steel scrap resource supply is limited. On the demand side, due to the off-season effect and low blast furnace production margins, electric furnace mills continue to suffer losses, steel scrap has no obvious cost advantage over hot metal, and steel mills, considering production costs and cash flow, mainly restock on a rigid demand basis.Overall, the supply-demand weakness on both sides for steel scrap remains unchanged, making it difficult to effectively drive prices. In the short term, prices will likely follow the general trend of ferrous metals.
Rebar: Cost Side Dominates Price Trend, Weak Demand Caps Upside Room
This week, rebar spot prices consolidated on a strong note, with the core driver on the raw material side—coking coal and coke futures rallied, driving rebar futures and spot prices up simultaneously. On the supply-demand fundamentals side, on the supply side, blast furnace mills continue to suffer losses on comprehensive steel margins and have low production enthusiasm; steel mills in south-west China have either reduced production or switched to other products. Electric furnace mills face inventory pressure due to poor shipments, cash flow difficulties, tight scrap invoice resources, and difficulty in sourcing scrap; multiple electric furnace mills in east China and south-west China have reduced operating hours or shut down. Overall, construction material supply pressure is not prominent. On the demand side, recently rebar futures have drifted higher, trading atmosphere has slightly improved, and end-users have increased purchases at low prices. Overall demand has recovered somewhat, but data for real estate and infrastructure remain unsatisfactory, with few construction projects in many areas, making it difficult for short-term demand to see a clear upturn. On the inventory side, this week, construction material inventory showed clear reduction, mainly because some ports in Zhejiang implemented navigation bans due to high water levels, preventing mill resources from being delivered to warehouses as planned. It cannot be ruled out that subsequent concentrated arrivals will lead to a dramatic surge in inventory pressure.In summary, the rebar fundamentals have no obvious imbalance for now, and the cost side is expected to support construction material prices bottoming out, but weak demand will continue to disrupt market confidence, capping upside room.
Hot-Rolled Coil: Supply-Demand Imbalance Remains, but Cost Support Strengthens; Hot Coil Prices to Consolidate Next Week
This week, hot coil prices consolidated with a stronger tone, and trading performance recovered. On the supply side, mill maintenance on rolling lines saw little change, and overall hot coil production edged up slightly. On the demand side, hot coil apparent demand continued to deteriorate this week, with the off-season impact still evident; hot weather and rain remain the main bearish factors, and demand improvement will only be confirmed in early September. On the inventory side, according to SMM's national 86-warehouse (large sample) social inventory statistics, hot coil social inventory stood at 4.4982 million mt, up 54,900 mt WoW, up 1.24% WoW. By region, east China and north China saw inventory buildup, while south China, central China, and north-east China saw small destocking. Looking ahead, the first round of coke price hikes is expected to materialize next week, iron ore prices may edge up slightly with small fluctuations, and hot coil cost support is about to strengthen. However, the supply-demand imbalance continues to accumulate, capping hot coil prices, and the upward drive is insufficient.In summary, the most-traded hot coil contract is expected to trade in the 3260-3360 yuan/mt range next week in a consolidation pattern.
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