Futures Prices of Iron Ore, Rebar and HRC Fall on Feb 23

SHANGHAI, Feb 24 (SMM) -

Macro

China

State-owned Assets Supervision and Administration Commission of the State Council: Promote the growth rate of the total profit of state-owned enterprises to be higher than that of the national GDP

Various data showed that China's economy is rebounding in 2023

Overseas

CICC: US Fed may tolerate higher inflation rather than the current 2%

US Treasury Secretary Yellen: US to provide Ukraine with $10 billion in new economic aid in the next few months

Raw materials

Iron ore

Iron ore futures fluctuated yesterday. The most-traded I2305 contract closed at 908.5 yuan/mt, down 0.49%. The overall transactions were acceptable. Steel mills purchased on rigid demand, pushing up the spot trading. Traded price of PB fines in Shandong moved between 913-917 yuan/mt, flat from the previous trading day, and that of PB fines in Tangshan was 919-925 yuan/mt, flat from the previous trading day.

According to SMM research, the total inventory of imported iron ore across ten major Chinese ports added 2.1% week-on-week to 97.17 million mt this week. Steel mills carried a relatively low in-plant inventory of iron ore, which beefed up iron ore prices to a certain extent. The prices are still affected by news and terminal demand. The market shall pay attention to macro factors and the sustainability of terminal demand. Iron ore prices are expected to fluctuate with occasional ups in the short term.

Coke

On February 23, the traded price of quasi-first grade metallurgical coke (coke dry quenching) in Lvliang city, Shanxi province was 2,890 yuan/mt (ex-factory), flat from the previous trading day.

Coking coal Downstream companies became more willing to purchase, and so did the traders. However, the overall coking coal supply may be tightened by the coal mine collapse in Inner Mongolia. Coking coal quotes offered by coal mines were stable. Shipments of some coals were under pressure, and the prices fell.

Coke inventory held by coke companies remained low on the higher production enthusiasm and better shipments of the producers. Some coke enterprises intended to quote higher prices owing to the firm cost support. Steel mills’ purchasing volume of coke grew amid the rising steel prices and increasing spot steel transactions. On the whole, the market sentiment improved, and the coke supply and demand were basically balanced. Besides, coking coal prices remained stable, supporting the coke prices. Some coke companies have begun to take a bullish attitude towards the market outlook. It is expected that the short-term coke prices may run steadily.

Steel scrap

On February 23, the prices of steel scrap across the country increased. Among them, the prices in east China increased 30-50 yuan/mt; that in central China increased 30 yuan/mt; that in south China rose 30 yuan/mt. The prices in other regions remained stable, and that in only few placed dipped slightly.

On the supply side, the rising prices of steel scrap made traders cautious in delivering, and thus it was hard for steel mills to pick up goods in low prices. On the demand side, according to SMM research, the operating rates of EAF steel mills continued to rise 4.67 percentage points to 44.3% as the sales improved. However, the insufficient steel scrap supply caused most enterprises to fail to increase the production. In the short term, the prices of steel scrap may rise further amid the imbalance between the supply and demand.

Finished products

Rebar futures fell yesterday, with a decrease of 0.40% throughout the day.

In terms of inventory, according to SMM statistics, the total rebar inventory was 11.9813 million mt, a decrease of 128,400 mt or 1.1%  from last week, and a year-on-year decrease of 593,300 mt or -4.7%. Among them, steel bars inventory decreased 12.84% compared and steel wire rod inventory increased 1.91% compared to last week.

HRC futures fluctuated widely yesterday and closed with losses of -0.26%. The spot market was stable. The market transactions were average as the speculative demand was obviously better than the terminal demand.

The overall terminal procurement was relatively deserted due to wide fluctuation in futures prices. The recovery pace of HRC slowed down and thus the social inventory of HRC across 69 warehouses in China surveyed by SMM this week increased 0.78% or 30,100 mt to 4.8791 million mt. From the perspective of cost, since iron ore and coke prices rose slightly, the HRC prices are unlikely to drop significantly amid strong cost support.