Analysis of the raw material market of steel November 9, 2021

【Imported Mine】
On the 8th, black iron ore futures oscillated in a wide range. The final closing of the 01 iron ore was 570.5, up 1.42%, and the trading volume was 660,700, and the daily Masukura was 5099 lots; the early trading prices were still based on a single negotiation; the transaction price in Tangshan area: PB powder 685 yuan/ton, super special powder 428 yuan/ton, mixed powder 550 yuan/ton; transaction price in Shandong area: PB powder 670 yuan/ton, super special powder 480 yuan/ton. The spot market for imported ore is operating steadily and weakly. Today, most traders are on the sidelines, with less speculative sentiment, and shipping mentality. They are still pessimistic about the market outlook. As for steel mills, procurement is still relatively cautious, with a small amount of on-demand procurement mainly. The second-level warning in Tangshan area is lifted, and short-term sentiment may improve. However, most steel mills are currently facing losses, and the demand for raw materials is still insufficient, which still has a depressing effect on ore prices. On the whole, it is expected that the iron ore market may be weak and volatile in the short term.

【Coke】
On the 8th, the domestic coke market is weak and stable. The second round of price cuts by steel mills has been proposed, and coke companies and steel mills continue to compete. At present, the mainstream quasi-first-level wet quenching in Shanxi is reported to be 3860-3960 yuan/ton. Some coking coal in Shanxi still continued to fall. Shanxi Changzhi low-sulfur lean coking coal (S0.5 G70-75) was reduced by RMB 250/ton to the current exchange rate of RMB 3,300/ton, and the cost of coke was reduced. Except for the limited production in certain areas due to environmental protection, most of the coking enterprises maintain normal production. Coking enterprises have experienced inventory accumulation due to the slowdown in downstream procurement. Steel mills’ blast furnaces still maintained limited production, rigid demand fell, and at the same time, steel prices fell weakly, steel mills’ profits had narrowed, and the willingness to continue to cut prices was strong. Some steel mills in Shanxi put forward a second round of request for a price reduction of 200 yuan/ton, and some steel plants in Shandong proposed a price reduction of 200 yuan/ton, which will be implemented on the 8th. The port coke spot is stable but weak, the saleable resources are tight, and traders are more active in shipping; the port collection cost is upside down, and some traders have a strong wait-and-see sentiment. On the whole, the demand for coke has weakened, the pressure on supply and demand has eased, and the impact of weak steel prices has been reduced. Steel mills have narrowed their profits. Steel mills are expected to cut prices.

【Coking coal】
On the 8th, the domestic coking coal market operated weakly and steadily. The operating rate of coal mines has increased compared with the previous period, and the output has increased. Affected by the weakening of downstream market demand, the inventory of some coal types in the plant has accumulated, and the quotations of some coal types have again been slightly lowered. Shanxi Lvliang high-sulfur main coking coal S2.3G85 will be reduced by 100 yuan to 3,400 yuan/ton from the factory, and Changzhi thin primary coking coal will be reduced by 250 yuan/ton to 3,300 yuan/ton. In the downstream market, coke prices are still expected to fall, and the demand for raw coal by coking companies has weakened, mostly on-demand procurement. Regarding imported coking coal, due to the expected increase in the domestic coke market decline and the weakening of the coking coal market, the downstream market’s demand for imported coal has weakened, non-Australian imported coal resources are limited, and the wait-and-see sentiment of the imported coal market has increased, and quotations have generally stabilized. Customs clearance vehicles at the Mongolian Coal Port remained low, terminal demand weakened, and market transactions were relatively flat. Traders’ quotations continued to decline. The mainstream quotations of Mongolian 5 clean coal were RMB 3050-3100/ton. On the whole, the demand is weak, the downstream coke price support is limited, and the coking coal market is under pressure.

【Steel billet】
On the 8th, the domestic market price of billet fell sharply, ranging from 50-300 yuan/ton, and the transaction was still sluggish. As of press time, Tangshan reported 4600 yuan/ton and Jiangyin reported 4480 yuan/ton. Although there was a repair rebound in some cities over the weekend, some demand was released. However, after the market opened today, the overall volume and price follow-up was not good. At the same time, the futures showed a situation of opening higher and oscillating lower. It is still difficult to provide favorable support to the market. Therefore, some cities have drastically lowered their billet prices. In addition, in the afternoon, the ex-factory quotation of Tangshan steel billet finally broke the previous price-insurance policy, showing a downward trend. In this situation, other cities may follow the downward adjustment. In the short term, the market demand side has not recovered much, and the trading sentiment is still bearish. Therefore, in the short term, the billet market tends to show a weak market.

【Scrap Steel】
On the 8th, the scrap steel market operated steadily and weakly. Some steel mills lowered their scrap purchase prices, and the decline has slowed down compared with the previous period. Among them, mainstream steel mills in East China cut 50 yuan/ton, some small and medium steel mills fell 20-50 yuan/ton; some steel mills in Hebei region cut 30-100 yuan/ton, and a few rebounded 60-80 yuan/ton. At present, heavy waste in the East China market does not include tax at RMB 3000-3140/ton. In the past two days, there has been widespread snowfall in many parts of the north, which has affected the recycling and transportation of scrap steel. At present, the trend of finished products is fluctuating, the profit margin of steel mills is low, and the arrival volume of mainstream steel mills is at a relatively high level, and the support for scrap steel is weak. The short-term scrap market is expected to be weak and stable.