Forecast for Next Week: Ferrous Metals May Continue to Fluctuate at Highs in the Short Term
This week, ferrous metals fluctuated upward within a narrow range. During the week, as US-Iran negotiations made no progress and the Strait of Hormuz remained closed, combined with declining US crude oil inventories, Brent crude oil surged sharply, driving coking coal higher. Although BHP port spot cargoes were available for purchase, which was bearish for market sentiment, futures had already priced in related expectations earlier, so iron ore pullback was limited and cost support remained relatively neutral. The Politburo meeting held mid-week had low direct correlation with ferrous metals, and ferrous metals fluctuated at highs during the week. Spot market side, end-users engaged in low-price restocking before the holiday, and as futures rose in the latter half of the week, speculative demand was also released.
In the short term, according to SMM survey tracking, some steel mills formulated short-term maintenance plans, causing daily average hot metal production to decline 8,900 mt WoW this week. Subsequent factors including environmental protection may continue to weigh, and hot metal production may retreat from highs, but coke has expectations for a third round of price increases to be implemented. Combined with uncertain overseas situations, cost support still exists. Steel side, concentrated procurement demand was released before the holiday, inventory destocking was solid, and post-holiday inventory can still maintain seasonal trends with no prominent imbalances for now. Overall, current ferrous metals supply-demand imbalances are not prominent, but vigilance is still needed regarding the impact of US-Iran developments on market sentiment. Post-holiday, ferrous metals may continue to fluctuate at highs.
Iron Ore: Strong Supply and Demand, Post-Holiday Prices to Fluctuate at Highs
Iron ore prices showed a weak-then-strong trend this week. Early in the week, as the ban on port departures of certain varieties was officially lifted, market prices pulled back slightly. However, since the policy had impacted the market for over a month, bearish sentiment was concentrated upon lifting, and ore prices quickly rebounded. From a macro and overall supply-demand perspective, iron ore port arrivals increased significantly by 4.11 million mt WoW. However, hot metal production stayed high, and combined with steel mill stocking demand released ahead of the Labour Day holiday, port pick-up volume continued to climb and hit new highs, driving notable port inventory destocking. On the industry level, end-user apparent demand remained in a growth phase, finished steel destocking slope expanded, industry imbalances were not yet significant, and high hot metal production kept iron ore demand robust, supporting ore prices. However, as Jimblebar fines resources were released in concentration, mainstream mid-grade PB fines prices were suppressed, limiting spot price gains and further narrowing the spot-futures price spread.
Looking ahead to next week, overall imported ore market supply still has incremental volume, with global shipments and port arrivals expected to continue growing. Demand side, based on SMM blast furnace maintenance survey data, hot metal production has basically peaked. Some steel mills will conduct routine maintenance going forward, and hot metal production may pull back slightly but will overall stay high. Overall, the imported ore market presents a pattern of strong supply and demand, continuing to support prices. However, attention should be paid to ongoing Middle East conflicts, combined with frequent policy-level news, which will continue to create disturbances on futures.Imported ore prices are expected to fluctuate at highs post-holiday.
Coke: Fundamentals Maintain Tight Balance, Post-Holiday Market May Be Generally Stable with Slight Rise
Supply side, coke producers maintained stable production with solid cost support, and as shipments were relatively smooth, their own coke inventory trended downward. Demand side, steel mills had certain rigid restocking demand for coke, but hot metal production pulled back slightly, and with weak steel market performance and mediocre steel mill profitability, procurement of coke became more cautious with controlled arrivals. Coking coal side, most coal mines produced normally. With the Labour Day holiday approaching, downstream continued to purchase, and fundamentals performed well. However, the market had fear-of-heights sentiment, and prices of some coal varieties that had risen significantly earlier pulled back slightly. Post-holiday coking coal prices are expected to remain stable for now. In summary, coke fundamentals still maintain a tight balance with cost support intact.The post-holiday coke market is expected to be generally stable with slight rise.
Steel Scrap: Cautious Market Trading, Prices May Move Sideways Next Week
Supply side, pre-holiday trader shipment enthusiasm was moderate, market circulating resources increased steadily, and steel scrap yard inventory remained at low operating levels. Demand side, recent steel mill arrivals showed little change, but due to increased tax invoice costs, steel mill profitability remained constrained, production enthusiasm was somewhat limited, and raw material procurement was mainly on an as-needed restocking basis. Overall, the current market had strong wait-and-see sentiment with cautious trading mentality. Short-term steel scrap prices are unlikely to show trending moves.Prices next week will most likely move sideways.
Rebar: Pre-Holiday Stockpiling Demand Released, Spot Prices Edged Higher
Rebar prices held up well this week, with the current nationwide average price at 3,202 yuan/mt, up 20 yuan/mt WoW. Supply side, steel mills in east China and southwest regions conducted planned rolling line maintenance this week, while a steel mill in the northwest resumed wire rod production lines. Overall production changed little. EAF steel mills faced difficulties in scrap collection, and combined with slow price launches in some regions leading to poor production profitability, some mills reduced operating hours this week with slight production declines. Demand side, approaching the Labour Day holiday, downstream construction site stockpiling demand was gradually released, with overall demand stronger than last week. Inventory side, both mill and social inventory destocking accelerated as steel mills moved resources to the market faster, and end-user projects stockpiled before the holiday, resulting in notable overall inventory destocking. It was learned that some regional steel mills continued to adjust surcharges for small-size specifications this week — on one hand because market demand for certain specifications increased with relatively high acceptance of surcharges, and on the other hand to further improve overall mill profitability. Looking ahead, the market will be largely closed during the holiday, but production will mostly maintain previous levels, so mill and social inventory will see a phased rebound post-holiday. In the first week after the holiday, downstream demand may see concentrated procurement, and inventory will continue destocking thereafter. Currently, supply-demand imbalances are relatively small, and raw material support remains.Post-holiday spot prices will continue to hold up well, but attention should be paid to post-holiday demand release.
HRC: No Prominent Fundamental Imbalances, Post-Holiday Prices May Fluctuate at Highs
HRC prices strengthened this week with weekly average prices edging up slightly, but overall transactions were slightly weaker WoW. Supply side, rolling line maintenance increased this week, and overall HRC production turned to decline. Demand side, market demand weakened this week as pre-Labour Day holiday restocking ended, and with some fear-of-heights sentiment, purchases were cautious. Inventory side, SMM-tracked HRC social inventory was 4.7636 million mt this week, down 238,600 mt WoW, down 4.77% WoW. Nationwide social inventory continued to decline, with south China, northeast, and east China markets seeing faster declines by region. Cost side, iron ore prices rose, the third round of coke price increases received no response, and HRC cost support slightly strengthened. Looking ahead, HRC fundamental imbalances are not prominent, and cost support has strengthening expectations. HRC prices may fluctuate at highs. In summary,the most-traded HRC contract is expected to trade in the 3360-3450 range post-holiday.
1. Data referenced in this report is available on the SMM database (
) for viewing.2. For more SMM steel news, analysis reports, database access, please contact SMM Steel Division Li Ping at 021-51595782.
*The views in this report are based on market-collected information and comprehensive assessments by the SMM research team. Information provided in this report is for reference only; risks are borne by the user. This report does not constitute direct investment research advice. Clients should make prudent decisions independently and not substitute this for their own judgment. Any decisions made by clients are unrelated to SMM. Additionally, SMM bears no responsibility for losses arising from unauthorized or illegal use of the views in this report.
SMM reserves the right to modify and has final interpretation authority over these disclaimer terms.
![SHFE Tin Rebounded Above 385,000 in Early Trading, Spot Market Trading Sluggish Awaiting Post-Holiday Guidance [SMM Tin Midday Review]](https://imgqn.smm.cn/usercenter/YfCBC20251217171753.jpg)
