Short-term HRC Prices may Remain Strong

SHANGHAI, Feb 17 (SMM) - Iron ore:

Iron ore futures prices rose yesterday, with the most-traded 2301 iron ore contract closing down 1.79% at 880 yuan/mt. Traders were active in delivery while steel mills mainly purchased as needed, hence the market trading atmosphere was fair. The transaction prices of PB fines in Tangshan stood at 882-893 yuan/mt, up 2-18 yuan/mt from the previous day.  The transaction prices of PB fines in Tangshan were 883 yuan/mt yesterday, flat from a day ago.

Ore prices were supported by demand. According to the iron ore inventory across the ten major ports in China, the total inventory of the four major varieties accumulated slightly this week. Among them, the demand for fines and lumps improved to a certain extent. In recent months, the inventory of four major varieties continued to decline. But steel mills mainly digested their own stocks in light of average profits, which limited the upward trend of ore prices. The iron ore prices moved rangebound.

Coke and coking coal

On February 16, the transaction prices of first-grade metallurgical CQD in Luliang, Shanxi were 2,890 yuan/mt (ex-factory), flat from the previous day.

Coal mines maintained normal production while downstream purchased as needed and traders were cautious. Coupled with declining online auction prices, market sentiment weakened and prices of some coal types continued to decline.

On the supply side, the supply of coke increased amid falling costs and improving profits. However, steel mills were less willing to purchase, leading to increasing inventory of some coke companies.
On the demand side, steel mills with sufficient coke inventory controlled the arrivals of coke and traders were still wait-and-see. However, with the improving sales of steel products, steel mills were less sensitive towards high coke prices.

Steel scrap

On February 16, steel scrap prices in China stopped falling and stabilised. The price hike in Hebei, Guangdong, Fujian and other regions was 20-80 yuan/mt, while in Yunnan and other places, the prices fell 10-50 yuan/mt. It is sure that the supply and demand relationship will continue to improve.

On the demand side, the steel scrap stored by steel mills before the CNY holiday was lower than in the same period in previous years, which boosted the restocking demand from steel mills post CNY. On the supply side, production of steel scrap recycling and processing enterprises has not yet fully recovered, and these companies were less willing to ship, which forced the steel mills to raise their purchase prices.

Rebar

Rebar futures prices added 2.09% yesterday.

Rebar futures prices soared by 2.09% yesterday. On the supply side, the profits of BF mills hovered around the break-even point, thus the BF mills maintained their operation and did not ramp up production. EAF mills resumed operation as scheduled post CNY, and the output of construction steel grows rapidly. On the demand side, futures prices boomed in the past two days, greatly pushing up speculative demand. And the market was highly active. Terminal companies have resumed work one after another and became more willing to purchase low-priced sources. The overall demand has shown a recovery trend.

HRC

HRC futures prices surged 1.56% yesterday, boosting the spot transactions.

The transactions in many markets are booming. Traders had strong speculative demand, and terminal enterprises purchased on demand. According to SMM statistics, the social inventory of HRC in 69 warehouses (large survey samples) across China was 4.7 million mt as of February 16, down 100,700 mt from the previous week.