This week, ferrous metals showed clear divergence, with raw materials outperforming finished steel overall. Coking coal and coke spot prices remained strong, with coke holding at high levels during the week after the fifth round of hikes took effect. Iron ore fell first before stabilizing, with average prices edging down MoM. Rebar edged up from low levels, while hot coil pulled back on a subdued note. The cost side still provided some support for steel prices, but domestic demand during the September-October peak season remained weak, and steel prices in the doldrums continued to squeeze steel mill profits. In terms of data, hot coil spot prices in US dollar terms fell $4/mt MoM, while export prices stayed relatively firm. Sheets & plates export prices showed mixed performance, while long steel prices rose $1-4/mt MoM, with export margins improving somewhat.
Looking ahead, coking coal and coke spot prices are unlikely to weaken in the short term, but the widening losses at steel mills and increasing maintenance-driven production cuts are accumulating negative feedback risks, and there is still disagreement over whether the sixth round of coke price hikes can be implemented. On iron ore, restocking ahead of the National Day holiday still provides support, but port inventories across 35 ports rebounded to 144.33 million mt, the earlier cost-side positives have been fully priced in, and rumors of long-term contract negotiations ending are spreading, so prices are expected to consolidate on a subdued note within a range. For finished steel, the focus is on pre-holiday restocking demand. Considering improving demand outside China and support from pre-holiday stockpiling, steel prices may drift higher. Export prices are expected to stay firmer, supported by continued gains in prices outside China.
