Analysis of the raw material market of steel November 19, 2021
【Imported Mine】
On the 18th, black iron ore futures were operating in a weak and fluctuating manner. The final closing of the 01 iron ore was 511.5, down 5.1%, and the trading volume was 730,500. Masukura 36,600 lots; early trading prices were still dominated by a single discussion, and some traders slightly lowered their quotations; Transaction prices in Tangshan area: PB powder 570/565 yuan/ton, super special powder 362 yuan/ton, Newman block 676 yuan/ton; Shandong area transaction price: PB powder 570 yuan/ton, super special powder 370 yuan/ton. The spot market for imported ore is operating weakly. The lowest point of the disk today fell to 510.5 yuan/ton, the lowest since February 2019. The market sentiment was overwhelming, pessimism was overwhelming, and traders were shipping mentality. As for steel mills, procurement is still relatively cautious, with a small amount of on-demand procurement mainly. The transaction varieties are mainly concentrated in mainstream low- and medium-grade mines. Port inventories continue to be high, and currently affected by the increased production of steel mills, the weak demand on the demand side has intensified. On the whole, it is expected that the iron ore market may be weak and volatile in the short term.
【Coke】
On the 18th, the fifth round of price cuts in the domestic coke market was fully implemented, with a cumulative drop of 1,000 yuan/ton. The mainstream quasi-first-level wet quenching in Shanxi reported 3060-3160 yuan/ton. Coking companies have increased their shipment pressure and accumulated inventory in factories. Coking companies will continue to focus on shipments in the short term. Affected by the continuous downward adjustment of coke sales prices, coke companies have suffered losses and restricted production in some regions. The production restriction policy of steel mills is still strict, the demand for coke is weakened, and the price of steel is weak, the future trend of coke of steel mills is still declining. Affected by the weakening market sentiment, the coke price still maintains a weak operation, and there are still downward adjustments. Traders are mostly holding a wait-and-see attitude, and purchasing enthusiasm is weak. On the whole, steel mills’ demand for coke has shrunk, coking companies have released their own supply, and supply and demand have gradually shifted to a looser trend. Coke prices will remain weak. After coking coal prices have fallen sharply, costs will decrease, and coke prices still have room for a fall. Continue to pay attention to environmental protection policies, steel mills and coking companies’ production restrictions, and changes in coking coal prices.
【Coking coal】
On the 18th, the domestic coking coal market continued its downward trend, and the decline of some coal types increased. Recently, the average daily output of coal mines has returned to a relatively high level, the market supply is relatively loose, the downstream demand is still sluggish, the pressure on coal shipments has increased, the factory inventory has accumulated, and the coal mines have again sharply reduced their ex-factory prices. Linfen’s low-sulfur main coking coal will be reduced by 300 yuan/ton to its ex-factory price of 2,800 yuan/ton, and Lvliang’s low-sulfur main coking coal will be reduced by 1,000 yuan/ton to 2,600 yuan/ton. Downstream coke prices have fallen for five consecutive rounds, coking plants and steel mills have maintained production restrictions, and the raw material coking coal inventories have rebounded. The enthusiasm for raw material coking coal purchases has been reduced, and the previous inventory is mainly consumed. The market performance is pessimistic. In terms of Mongolian coal, the end market demand is general, and traders’ quotations continue to be lowered. The mainstream quotations of Mongolian 5 clean coal are around RMB 2450-2500/ton. On the whole, short-term coking coal market supply is gradually released, demand shrinks, superimposed coking prices have fallen sharply, and the coking coal market still has room for price reductions.
【Steel billet】
On the 18th, domestic billet market prices were stable, and individual highs declined, and overall transactions were generally weak. As of press time, Tangshan reported 4180 yuan/ton and Jiangyin reported 4250 yuan/ton. Today’s futures performance was poor, and the market plunged down in the afternoon, adding to the wait-and-see sentiment of the market. Coupled with the current low-level purchases of downstream steel rolling companies, the overall trading atmosphere in the market is not good. Although traders are willing to purchase spot goods due to the imminent delivery of orders, they are currently willing to postpone delivery due to their overall poor performance and greater cost pressure. Judging from the current situation, in the context of low demand, weak mentality, high costs, and tight resources, the short-term billet market may show a low-level volatility adjustment.
【Scrap Steel】
On the 18th, the scrap steel market performed steadily and weakly, and steel mills with falling prices decreased compared with the previous period. Among them, some small and medium-sized steel mills in Eastern China will cut 20-50 yuan/ton; some steel mills in North China will cut 50-130 yuan/ton, and some steel mills will rise by 50-150 yuan/ton; some steel mills in Northeast China will cut 10-100 Yuan/ton range; some steel mills in the central and southwestern regions cut 20-120 Yuan/ton range. At present, heavy waste in the East China market does not include tax at RMB 2,600-2860/ton. Recently, the price of finished products has continued to fall, and the profit margin of steel mills has been significantly narrowed. In addition, the release of terminal demand is not smooth. In addition, the prices of iron ore and coke are weaker and downward. The cost of molten iron in some areas is already lower than the price of scrap, and the scrap market has no favorable support for the time being. It is expected that the short-term scrap market will continue to run steadily and weakly, and the decline may slow down.