**Cold Fall in the Steel Market: A Dilemma in Steel Prices**
This week, the steel market showed a mixed trend with several key developments across raw materials and finished products. Let's break down the current situation and expectations for the coming days.
**Raw Materials:**
The Tangshan billet market experienced an initial surge followed by a decline. After a rebound, prices dropped by 10 yuan, then rose again by 10 yuan, and eventually increased by 20 yuan compared to the same period last week. Despite the fluctuation, the near-term market sentiment remained relatively strong, though transaction volumes weakened. On Wednesday, Yanyan Steel issued 3,195 contracts, which was 15 times higher than the average. Although the market is light, with the arrival of the Golden September season and dropping temperatures, merchants still maintain confidence in the outlook. However, the recent slow growth has led to a slight drop in billet prices, and weak sales have also impacted business. Despite this, high raw material costs and tight spot resources continue to support the billet price. The market outlook remains stable, with margins expected to range between 10-30 yuan.
The iron ore market remained quiet this week. The Platts Index for imported minerals fell by $1 due to weaker bidding from foreign mines, while spot prices stayed steady. Some steel mills reduced their prices last week, but the goods sold after the drop were not well received. This week, there was a small increase, generally around 5-10 yuan/ton. Mine operators remain optimistic and maintain a normal shipping rhythm. Individual sellers are reluctant to sell, and it’s expected that imported ore will continue to oscillate around $138, while domestic mines will mostly stay stable with slight increases in some regions.
Coke prices continued to rise this week, up by 20-50 yuan/ton, driven by better downstream demand. Steel mills purchased more coke, and coking coal prices also increased. With the National Day and Mid-Autumn Festival holidays approaching, steel demand is expected to grow further. It’s anticipated that coke prices will continue to rise next week, by about 20-30 yuan/ton.
The scrap market saw a slight increase this week as some manufacturers raised prices to attract supply. However, the start of "Jinjiu" (Golden September) was slightly weak, and large steel enterprises saw improved arrivals, but the market’s ability to sustain growth remains limited. Customer willingness to buy at higher prices is low, and it’s expected that the scrap market will remain weak in the near term.
The pig iron market remained stable with a slight upward trend. Raw materials and finished products have been consolidating narrowly, creating a wait-and-see atmosphere. Some steel mills struggled to get goods at low prices, and turnover was poor. Despite this, high costs have supported pig iron prices, and merchants are not eager to ship. It’s expected that the pig iron market will remain stable next week.
**Steel Products:**
Tangshan’s building materials market first rose after a period of suppression. With eased financial pressure and cost support, prices rose steadily. However, weak follow-up demand and sluggish performance caused prices to weaken again. While some markets have seen increased stock, all parties are under pressure and avoid major adjustments. It’s expected that steel prices will face a dilemma next week, with potential for further weakness.
Tangshan’s profile steel market started the week with some volatility but later weakened. Environmental policies and constrained billet supply, combined with higher procurement costs, have put pressure on profile steel mills, limiting their willingness to lower prices. However, late-week heavy volume and rising shipping pressures have affected manufacturer confidence. Low-cost resources increased significantly on Thursday, leading to a revision of bullish expectations. With fundamentals and news both under pressure, the market is expected to remain weak next week, though the decline may be limited due to high costs.
Tangshan’s pipe market remained stable and slightly stronger, with seamless pipes holding steady and welded pipes increasing by 20 yuan/ton. Although raw materials became tighter, terminal procurement remained sluggish. Pipe mills tried to push prices up, but the market remained weak. As weather cools, downstream construction activity is expected to increase, boosting pipe demand. However, businesses remain cautious, focusing on small-scale purchases. It’s expected that pipe prices will rise slightly next week, by about 50 yuan/ton.
The steel strip market was slightly stronger this week, with leading mills raising prices by 40-50 yuan. However, transactions turned weak after the initial rise, and prices stabilized toward the end of the week. With good expectations for "Golden September," some suppliers restocked, but steel mill maintenance plans reduced short-term output, supporting prices. It’s expected that strip steel will remain stable or weak next week.
**Current Operation Suggestions:**
For raw materials, it’s recommended that businesses replenish small amounts weekly, seize opportunities for timely delivery, and traders should purchase based on single operations.
For steel products, despite a slight decline, the market continues to see gains. The emergence of low-cost resources is impacting the mainstream. Merchants should focus on de-stocking, optimize inventory, and adopt a “fast-in, fast-out†low-stock strategy to manage market risks effectively.
**Tangshan Market Overview:**
Raw materials in Tangshan were mixed this week. Although some steel companies slightly increased their purchase prices for iron ore fines, the overall market remained weak due to falling foreign mineral prices. Middlemen were hesitant to enter the market. Coke and furnace burden saw a slight increase, and positive factors like the manufacturing prosperity index continued to rise, pushing the market slightly higher. Downstream steel purchases remained strong, and coking coal prices continued to strengthen, providing strong support. Due to earlier arrivals, this week’s supply tightened slightly.
Finished steel products in Tangshan weakened this week. The 145 strip fell slightly, and without strong transaction support, the market operated weakly. Although some pipe manufacturers had few stocks, it was difficult to secure significant orders. Following price adjustments, companies took profits to ensure smooth sales. Downstream building material purchasing enthusiasm remained low, but some low-cost resources saw slight improvements. Weak steel bills pushed prices back into a weaker trend. The demand for "Jinjiu" was weaker than expected, and profile transactions did not see heavy volume. Under cost pressure, prices continued to fall slightly.
**Industry News:**
1. **China’s Stainless Steel Output Expected to Exceed 25 Million Tons in 2020:** At the 8th International Stainless Steel Congress, Li Cheng, Honorary Chairman of the China Special Steel Enterprises Association, predicted that China’s stainless steel production would likely exceed 25 million tons in 2020, with apparent consumption over 20 million tons. He also highlighted that long-term economic goals, including industrialization, informatization, urbanization, and agricultural modernization, will drive the development of the stainless steel industry.
2. **Coal Prices Show Mixed Trends:** In the second half of the year, some coal prices rose, bringing hope for a rebound. However, downward pressure on coal prices is expected to persist. Demand for coal is projected to increase slightly, and supply will continue to expand. With higher imports, the market is expected to show a loose supply-demand balance and structural surplus, keeping downward pressure on prices.
3. **Labor Disputes Continue at Shougang’s Peruvian Company:** Workers at Shougang Hierro Peru began indefinite strikes in mid-August, demanding higher wages and better working conditions. Negotiations between the company and union workers broke down, leading to ongoing disputes. These issues have caused significant economic losses and continue to affect the operation of overseas mining enterprises.
4. **Iron Ore Shipments Rise in Australia:** Iron ore shipments from Port Hedland, Australia, reached 27.4 million tons in August 2013, up from 26.6 million tons in July. China, the largest buyer, imported 22.3 million tons in August, compared to 20.4 million tons in July. Bloomberg noted that China’s manufacturing sector resumed growth, suggesting economic stabilization. Analysts believe that China’s economy is on track to meet its 7.5% GDP growth target for 2013 and maintain this pace in 2014.
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