Iron Ore, Rebar and HRC Futures Prices Close with Gains on Mar 1

SHANGHAI, Mar 2 (SMM)－

Macro

China

China's February manufacturing PMI was 52.6

Stringent mine safety inspections in Inner Mongolia expanded the production suspension scale of coking coal mines

Overseas

Fed's Kashkari: Open to raising interest rates by 25 or 50 basis points at US Fed's March meeting

Raw materials:

Iron ore

The most-traded I2305 contract gained 2.42% to close at 908.5 yuan/mt. Traders maintained normal shipments. Steel mills held a strong wait-and-see sentiment and mainly purchased on demand. The overall transactions were modest yesterday. Traded price of PB fines in Shandong moved between 905-915 yuan/mt, up 10-12 yuan/mt from the previous trading day, and that of PB fines in Tangshan was 922-930 yuan/mt, up 15-25 yuan/mt.

Recently, the apparent demand for finished products has been mediocre, but the PMI of China's manufacturing industry in February exceeded expectations, boosting market sentiment and sharply driving iron ore prices. In addition, the weather condition in Tangshan and Qinhuangdao has improved, and the sintering production limit has ended, slightly pushing up the demand for iron ore. Iron ore prices may continue to move rangebound with occasional ups.

Coke

On March 1, 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 output dropped owing to the coal mine accidents and the Two Sessions. The demand from coke and steel mills was acceptable, hence quotations of some coal types were raised by 50-100 yuan/mt.

The coke inventory stood low. Some coke companies slightly limited their production, while the sales were better.
Coke demand continued to grow. Steel mills maintained high operating rates, and the pig iron output continued to rise.
Strict environmental protection inspections limited some coke companies’ production. Coking coal prices gradually rose, which supported the spot coke prices. And the market was generally bullish on the coke prices. Besides, some coke companies in north-west China have raised the coke prices in the first round. The coke prices may fluctuate with some upward potential in the short term.

Steel scrap

The purchase prices of steel scrap declined 10-30 yuan/mt in many places in China yesterday.

In the short term, steel mills’ demand for steel scrap increased as they produced actively. As such, prices of steel scrap are likely to increase this week.

Finished products:

Rebar

Rebar futures prices added 1.10% yesterday. China's manufacturing PMI in February was announced, which was better than market expectations. Market’s confidence in economic recovery increased, driving the ferrous metal prices to increase. On the supply side, according to SMM research, the production of BF and EAF steel mills gradually will increase in March, and the output of rebar is expected to rebound at an accelerated pace. On the demand side, as both futures and spot prices fluctuated upwards, terminal demand increased and traders purchased actively.

The Two Sessions will be held soon, and the market is looking forward to the release of some good news. Superimposed on the recent increasing transactions, market sentiment has improved significantly, and short-term steel prices may continue to run relatively strong. In the medium term, it is recommended to pay attention to policy trends during important meetings, and the resumption and production increase of steel mills in March. If the increase in production exceeds demand, market confidence may be shaken, and steel prices are at risk of falling from high levels.

HRC

HRC futures prices fluctuated upwards yesterday amid the favourable macro news and gained 1.10%. The transactions in the spot market have improved significantly in light of the significant increase in the demand from terminals and traders. But the transaction prices remained low. In yesterday afternoon, traders raised their prices, which weighed on the market transactions.

Manufacturing PMI in February Reported at 52.6, up 2.5% According to SMM research, the stock of HRC in mainstream cities has declined to varying degrees and the transactions have picked up significantly under the favourable macro front and falling inventory. At the same time, the Two Sessions are approaching, and the favourable policy is expected to be released. However, considering that the current terminal demand has yet to be verified, it is expected that the short-term HRC prices will continue to fluctuate in a wide range.