Latest Trends in Steel Prices

The steel industry is a fundamental and highly competitive sector that serves as the backbone of the global economy, providing essential materials for infrastructure, construction, transportation, and manufacturing. It encompasses the production of steel from raw materials, primarily iron ore and coal, through various processes such as smelting in blast furnaces or recycling scrap in electric arc furnaces. The industry produces a diverse range of steel products, including long products like beams and reinforcement bars, flat products such as sheets and plates, as well as specialty steels like stainless and galvanized steel. 

1. Production of five major steel grades declined

This week, the total inventory of the five major types of steel was 17.7999 million tons, an increase of 60,900 tons over the previous week. Among them, the steel mill inventory 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, 20 of the 87 steel production lines in Tangshan, China were actually put into operation, with the overall operation rate of 33.9%, down 15.25% from the previous week. The capacity utilization rate was 38.11%, down 16.9% from the previous week. 

2. Export procurement supervision strengthened by General Administration of Customs

As the focus of the "National Sword 2024" joint operation, the General Administration of Customs of China is taking advantage of the convenient policies of bonded areas and special customs supervision areas to crack down on smuggling activities. From May 1, China Customs will conduct centralized batch inspections on exported Q195 and Q235B hot-rolled coils, which will have a significant impact on export transactions.

Since the country fully abolished the export tax rebate for all types of steel in 2021, export companies no longer need to submit invoices and export documents from upstream suppliers to the tax authorities when applying for export tax rebates. Downstream units will purchase special VAT invoices at a lower price for input tax deduction without actually purchasing steel. This special operation will significantly affect the steel export market, increase domestic steel supply pressure and have a negative impact on steel price development. 

3. Steel futures and spot prices

On July 4, domestic steel market prices rose slightly, and the ex-factory price of Qian'anpu billet resources in Tangshan, China, including tax, increased by 20 yuan to 3,370 yuan/ton. In the morning, rebar futures opened high and fluctuated, and China's spot prices continued to rise in the morning. In terms of transactions, the market performed well in the morning, and rebar futures remained high in the afternoon. After the rise, spot prices eased slightly in some cities. Traders decided to cash out in time, and speculative demand was not strong.

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.

4. Three major steel product market prices

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.

5. Other steel product market prices

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 SteelOn 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.

6. Raw material spot price

Iron Ore

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.

 At Qingdao Port:

- 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).

Coke

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.

Scrap Steel

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.

7. Raw materials market

Billet: Slightly increased

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.

Iron ore: high-level fluctuations

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.

Coke: Stable but strong

With the increase in downstream purchases, the inventories of coking enterprises mostly remain at a low level. The mentality of coking enterprises has improved, the market's expectation of price increases remains, and the operating rate has rebounded. It is expected that coking coal will run strong on the 5th.

Scrap steel: Strong performance

The market remained in the red and fluctuated on the 4th, and market transactions improved. In addition, the current scrap steel supply is at a low level, and molten iron has supported the shortage of scrap steel to a certain extent. Raw materials continue to support finished products. It is expected that scrap steel will be stable and strong on the 5th.

Pig iron: Continue to increase

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. 

8. Market Forecast

On the 4th, the market actively explored the upside, the trading atmosphere was obviously heated up, and the prices in some regions continued to rise. At present, this upward trend is due to the improvement in sentiment on the one hand, and the strengthening of furnace materials has led to a rebound in finished products on the other hand. However, the extent of the rebound is estimated to be limited, and it is necessary to continue to monitor whether the meeting will bring unexpected good news. It is expected that steel prices will strengthen slightly on the 5th, with a range of 10-30 yuan.