SHANGHAI, Feb 23 (SMM) - Macro front
The Industry Department of the National Development and Reform Commission held a symposium on the steady growth of industries in some key provinces.
Accelerated the commissioning of PPP projects under stable investment.
OECD: GDP growth remained weak in fourth quarter of 2022.
Iron ore
Iron ore futures prices remained volatile yesterday, with the most-traded 2301 iron ore contract closing down 0.58% at 909.5 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 Shandong were mainly 912-915 yuan/mt, which was 1-3 yuan/mt lower than the previous day, while the PB fines in Tangshan were sold at 920-924 yuan/mt, down 1-7 yuan/mt.
According to SMM statistics, the operating rates of blast furnaces and the utilisation rate increased slightly. Due to the delay in the resumption of some steel mills, the increase in pig iron slowed down. The tight supply provided fundamental support for the prices. But the market players should pay attention to the impact of the news front on the iron ore prices. It is expected that the prices of iron ore will remain strong in the short term.
Coke and coking coal
On February 22, the transaction prices of first-grade metallurgical CQD in Luliang, Shanxi were 2,890 yuan/mt (ex-factory), flat from the previous day.
Downstream enterprises purchased as needed and demand from traders was not released. Some coal mines had a slight inventory pressure. But demand for some coal types was strong and mines quoted firmly.
On the supply side, coke enterprises resumed to normal level and market sentiment gradually improved. Some traders were willing to pick up goods, and steel mills were more active in procurement. As such, coke enterprises shipped smoothly while some coke enterprises were reluctant to sell. On the demand side, terminal demand has picked up significantly and steel prices have rebounded slightly. Amid the recovering profits, operating rates of blast furnaces continued to grow, and coke demand has improved. On the whole, the profits of steel mills has improved, the operating rates continued to grow. As such, the demand for coke increased, and the short-term coke market may temporarily stabilise.
Steel scrap
On February 22, quotes of steel scrap in most regions across China generally rose. The price hike was 20-50 yuan/mt in east China; 30 yuan/mt in Yunnan and other places; 20-40 yuan/mt in north China; 20 yuan/mt in some areas in south China, central China, and north-west China. It is sure that the supply and demand relationship will continue to improve.
On the supply side, the prices of steel scrap have risen recently. The producers were reluctant to sell and delivered prudently, which made it more difficult for steel mills to purchase steel scrap. On the demand side, according to SMM research, the average operating rate of EAF mills rose further by 4.67 percentage points week-on-week to 44.3%. Recently, the sales of steel mills have improved, stimulating the production. However, most mills failed to ramp up production owing to the insufficient supply of scrap steel. In the short term, the game between the supply and demand for scrap steel will intensify, and the prices of steel scrap will grow.
Rebar
Rebar futures prices added 0.12% yesterday.
On the supply side, according to SMM statistics, the average operating rate of blast furnaces was 92.27% this week, up 0.15 percentage point WoW; the average capacity utilisation rate stood at 93.12%, up 0.07 percentage point. The daily average pig iron output of sample steel mills was 2.23 million mt, up 0.16 percentage point. The total output of construction steel continued to rise this week. On the demand side, the futures prices fluctuated, and the market held a wait-and-see sentiment. Speculative demand decreased rapidly, and terminal companies purchased normally. The overall demand was significantly weaker than the previous trading day.
HRC
HRC futures lost 0.23% yesterday. Spot trading decreased compared with the previous trading day.
The speculative demand of traders from all over the country performed well. Terminal enterprises mainly purchased on demand due to fears of the further HRC price hike. The surging HRC prices aroused a wait-and-see sentiment among terminal companies. Arrivals in Shanghai were intensive. SMM surveyed that the social inventory in Zhangjiagang and Lecong fell, while that in Shanghai grew palpably. The market highly expects the macro policies to be bullish amid the approaching Two Sessions. HRC costs were highlighted by the rise in iron ore prices and stable coke prices. Therefore, in the short term, the HRC prices will move rangebound with some upward potential driven by the demand and supporting macro policies.
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