Ferrous products prices dropped last week for lack of market confidence and poor terminal demand. Ferrous products prices fluctuated in a wide range last week led by coke and coking coal, while the prices of rebar and HRC (hot-rolled coil) also dropped to some extent. Affected by the issue that India raised its export tariffs on iron ore at the beginning of the week, the most-traded rebar and HRC futures contracts rose slightly, driving up the prices in the spot market, and the speculative demand rebounded temporarily. In the middle of the week, the State Council held an economic meeting related to “stabilising growth”. Although there were bullish factors on the macro front, futures prices dropped amid poor terminal demand. Market pessimism aggravated, and spot prices continued to reach new lows, with some hitting the year-to-date low. The spot and futures prices of finished products rebounded slightly approaching the weekend.
Rebar output dropped slightly again last week on serious losses suffered by EAF-based steel mills. In terms of rebar, as the cost of BF-based steel mills is mostly around the break-even point, the supply may not change much. Most EAF-based steel mills have already suffered serious losses, and some of which have plans to shut down their furnaces in order to reduce the production. It is expected that the output of rebar will drop slightly this week. The output of HRC dropped significantly last week, mainly due to the overhaul of some steel mills in east China. Looking ahead, the supply of HRC is unlikely to change greatly. And the mills have no plans to reduce the production of HRC despite poor profit of mills recently, according to SMM research.
Steel demand remained muted amid bearish sentiment and impacts from the COVID-19 pandemic. For rebar, the demand is expected to stay weak on falling steel prices, muted terminal demand, and deteriorating pandemic situation in some places that hindered the progress of some construction projects. In terms of HRC, the spot prices plummeted last week, and the market was quite bearish, hence the overall transactions were disappointing. In the short term, due to the impact of the pandemic and the rising downward pressure on the domestic economic development, the downstream demand for HRC will be subsiding, and the HRC market will maintain the situation of oversupply.
Source: SMM Information & Technology Co, Ltd
