Industry News: Prices Rise Across The Board! Six Steel Mills Raise Prices! Will Reduced Steel Production And Poor Sales Limit Price Increases?

This week, the total inventory of the five major steel products was 17.7999 million tons, an increase of 60,900 tons from the previous week. Among them, the inventory at steel mills was 4.8952 million tons, a decrease of 116,800 tons from the previous week; the social inventory was 12.9047 million tons, an increase of 177,700 tons from the previous week. This week, in Tangshan, China, out of 87 section steel production lines, 20 were actually in operation, with an overall operating rate of 33.9%, a decrease of 15.25% compared to the previous week. The capacity utilization rate was 38.11%, a decrease of 16.9% from the previous week.

The General Administration of Customs of China is cracking down on smuggling activities using the facilitative policies of Free Trade Zones and Special Customs Supervision Areas as a key focus of the "National Sword 2024" joint action. Starting from May 1st, China Customs will intensively inspect exports of Q195 and Q235B hot-rolled coils on a per-shipment basis, which will significantly impact the export transactions.

Since the complete abolition of export tax rebates for all steel varieties by the state in 2021, exporters no longer need to submit invoices and export documents from upstream suppliers to the tax authorities for export tax rebate applications. Downstream entities purchase VAT invoices at lower prices for input tax deduction without actually purchasing steel. This special action will markedly affect the steel export market, increasing domestic steel supply pressure and negatively influencing steel price trends.

Steel futures and spot market prices：

On July 4, domestic steel market prices rose slightly, with China Tangshan Qian'anpu billet resources ex-factory price including tax increased by 20 yuan to 3,370 yuan/ton. In the early trading, the futures of rebar opened high and fluctuated, and the spot price of China continued to rise in the morning. In terms of transactions, the market transaction performance was good in the morning, and the futures of rebar remained high in the afternoon. The spot prices in some cities loosened slightly after the increase. Merchants chose to cash in in time, and speculative demand was poor.

On July 4, the main closing price of screw futures was 3616, up 0.86%, DIF and DEA were upward, and the RSI three-line indicator was at 48-67, running between the middle and upper tracks of the Bollinger Band.

On July 4, 6 steel mills raised the ex-factory price of construction steel by 20-50 yuan/ton

Rebar：On July 4th, the average price of Grade III seismic threaded steel (20mm) in 31 major cities across China was 3674 RMB per ton, an increase of 18 RMB per ton compared to the previous trading day. This week, the production of threaded steel decreased as expected, while factory inventories decreased and social inventories increased, indicating a slight decline in apparent demand, with neutral data overall.

In the short term, recent gains in futures steel prices have boosted market sentiment despite a decrease in apparent demand and the arrival of hot weather following the rainy season. The momentum driving price increases based on sentiment is expected to weaken, therefore it is anticipated that prices for construction steel may see a slowdown in their upward trend on July 5th.

Hot rolled coil：On July 4th, the average price of 4.75mm hot-rolled coil in 24 major cities across China was 3760 RMB per ton, up 11 RMB per ton compared to the previous trading day. On the supply side, this week saw an increase in production of hot-rolled coils by steel mills, leading to an increase in factory inventories and social inventories, resulting in overall inventory buildup.

The upward trend has provided some confidence to the market, but transactions primarily involve lower-priced resources, as downstream sectors show limited acceptance of higher-priced resources. Currently, downstream demand is in its traditional off-season, and the impact of high temperatures and rainfall on overall production is significant.

The market is currently characterized by the contradiction between high supply and low demand. Overall, it is expected that prices of hot-rolled coils will fluctuate in the near term.

Cold rolled coil：On July 4th, the average price of 1.0mm cold-rolled coil in 24 major cities across China was 4207 RMB per ton, up 2 RMB per ton compared to the previous trading day. On the 4th, hot-rolled coil futures showed positive fluctuations. Some merchants raised their prices in the morning session, but actual market demand was limited, and after the price increase, transactions were weak. In the afternoon, merchants primarily lowered prices slightly to facilitate sales.

In terms of inventory, the social inventory of cold-rolled coils in 26 cities was 1.4775 million tons, an increase of 18,700 tons week-on-week. The process of reducing cold-rolled coil inventory in the market remains slow. Overall, traders are currently operating very cautiously, with a focus on discreetly lowering prices to clear inventory and recover funds. It is expected that cold-rolled coil prices on July 5th will primarily experience narrow fluctuations and adjustments.

Galvanizing：On July 4th, the price of galvanized coil in China saw a slight increase. The average price of 1.0mm galvanized coil was 4819 RMB per ton, up 4 RMB per ton compared to the previous trading day. In various regions, the ex-factory prices of privately-owned galvanized steel mills were partially raised by 20-30 RMB per ton, with the ex-factory price of northern resources around 4230 RMB per ton. It is expected that on July 5th, domestic prices of galvanized coils will primarily remain stable with slight adjustments.

Silicon Steel：On July 4th, the domestic non-oriented silicon steel market prices remained stable. On the market front, futures electronic trading saw a fluctuating upward trend, with non-oriented silicon steel prices primarily holding steady. As the market enters the off-season, downstream orders are gradually weakening, with purchases made mostly on an as-needed basis. Market demand continues to decrease, and inventory levels remain relatively high, leading to cautious sentiment among traders. It is expected that on July 5th, domestic spot market prices for silicon steel will mainly remain stable with localized adjustments.

Stainless Steel：On July 4th, stainless steel futures experienced narrow fluctuations and moved upwards, closing with a 0.25% increase to 14,175 RMB per ton. In the afternoon, spot prices for stainless steel slightly increased. A new round of guidance prices from South China steel mills saw an uptick, prompting spot market traders to slightly raise their prices.

On July 4th, the iron ore port spot price index was as follows: the 62% index was 861 (unchanged), the 58% index was 769 (up by 6), and the 65% index was 1005 (unchanged). The port lump ore premium was $0.2802 per dry ton unit, an increase of $0.018.

- PB fines were priced at 851 RMB (approximately $112.17 per dry ton).

- Newman fines were priced at 864 RMB (approximately $112.70 per dry ton).

- Carajas fines were priced at 1010 RMB(approximately $133.01 per dry ton).

- Super Special fines were priced at 682 RMB (approximately $89.25 per dry ton).

On July 4, the price of metallurgical coke in Tangshan, China was temporarily stable. The current mainstream transaction price in the market is 2,360 yuan/ton for first-grade dry quenching, and 1,960 yuan/ton for quasi-first-grade wet quenching, both of which are ex-factory prices in cash including tax.

On July 4, the scrap steel market in Zhangjiagang operated smoothly. The current mainstream quotations in the market excluding tax are: heavy scrap raw materials 2440-2520, steel pipe shears 2270-2390, silicon steel sheets 2550-2590, cold and hot rolled materials 2470-2550, steel shavings 2340-2400, steel bar pellets 2610-2710, straight steel bars 2530-2610, crushed material piles with a specific gravity of 1.2 or above 2520-2600, unit:RMB/ton.

Judging from the current market conditions, macroeconomic expectations are relatively positive. On the 4th, the market remained in the red and fluctuated. Downstream finished products increased by 10-30 yuan, leading to increased speculation. It is expected that steel billets will increase slightly on the 5th.

The supply of iron ore is still relatively sufficient, but in the long run there is pressure for the continued expansion of molten iron output. However, given the current relative stability and low price valuations, it is expected that iron ore will still have room for a certain rebound on the 5th.

At present, the inventory of pig iron enterprises continues to remain at a low level, and with the maintenance of some enterprises, the supply pressure is not great for the time being. In addition, the market continues to rise, and merchants are more willing to raise prices. It is expected that pig iron will remain stable with an increase on the 5th.

On the 4th, the market actively explored the rise, the trading atmosphere obviously warmed up, and the quotations in some regions continued to rise. At present, this upward trend is on the one hand the boost of sentiment, and on the other hand, the strong furnace materials lead the rebound of finished products. However, the height of the rebound is estimated to be limited, and it is necessary to continue to observe whether the meeting will bring unexpected good news. It is expected that the steel price will strengthen slightly on the 5th, with a range of 10-30 RMB.