On September 6th, the latest weekly analysis report from Nisshin Shinkansen, a well-known spot trading platform, highlighted mixed trends in the domestic steel market. This week saw a slight decline in the prices of billet, scrap, and imported iron ore, while coal and coke prices continued to rise steadily. Domestic iron ore prices remained relatively stable, with a minor drop observed in imported ore prices. As of Friday, the purchase price of 66% Fe fine powder at Tangshan Steel Plant in Hebei Province stayed around 1,070 yuan per ton. Meanwhile, prices at Tangshan District steel mills increased by 100,000 tons to 6.15 million tons, and domestic mines saw a decrease of 100,000 tons to 400,000 tons. In Liaoning Province, the price of 66% Fe fine powder dropped by 10 yuan to 980 yuan per ton.
Turning to raw materials, domestic coke prices experienced a modest increase. By Friday, secondary metallurgical coke (A: 13.5%) in Shanxi reached approximately 1,140 yuan per ton, while primary metallurgical coke (A: 12.5%) was quoted at 1,260 yuan per ton, widely accepted by coking companies. In Hebei and Liaoning, primary metallurgical coke prices climbed to between 1,410 and 1,430 yuan per ton, up by 30 yuan per ton. The inventory of 10 leading steel mills in Tangshan remained at 550,000 tons.
This week also saw a broad-based increase in coal prices. Shanxi Coking Coal Group raised main coking coal prices by 20 yuan, with Tunlan coal reaching 1,080–1,130 yuan per ton (by rail). Hebei Kaiyuan Group increased its main coking coal prices by 5 yuan to 1,045 yuan per ton, while Henan Pingdingshan Coal Coking Group raised prices by 30 yuan to 1,120 yuan per ton. Similarly, Heilongjiang Longco Coal Group increased its main coking coal prices by 30 yuan to 1,300 yuan per ton. Despite rising coal and coke prices, domestic steel prices have remained somewhat soft, with pressure on margins gradually increasing. Analysts expect a steady rise in the coke market over the next week, while coking coal prices are expected to stabilize temporarily.
The cost of producing rebar has also risen this week due to higher coke prices. For steel mills with an annual capacity of over 10 million tons, the production cost of rebar is now approximately 3,661 yuan per ton, up by 13 yuan from last week. For mid-sized mills (5–10 million tons), the cost rose to 3,569 yuan per ton, an increase of 14 yuan. Smaller mills, with less than 5 million tons of annual capacity, reported a cost of 3,485 yuan per ton, up by 14 yuan. The average market price for third-grade rebar on Friday was 3,627 yuan per ton, down 26 yuan from the previous weekend, reflecting the lag in raw material costs. As a result, small and medium-sized steel mills are operating under low-profit conditions.
In terms of inventory, lower steel prices have led to reduced enthusiasm among large and medium-sized steel mills for purchasing imported ores and scrap. However, some mills continue to raise prices due to earlier tight inventory levels, keeping stock levels stable.
Starting August 30th, China will implement a 3% MFN tax on lignite imports. Currently, lignite accounts for about 20% of China’s coal imports, with an average import price of around $52 per ton since 2013. This new tax is expected to add roughly 10 yuan per ton to the cost, potentially limiting the growth of coal imports.
Iron ore shipments from Brazil and Australia increased by 4.94% and 9%, respectively, in August. Nisshin Shinkansen analysts noted that major mining companies like Rio Tinto, BHP Billiton, and Vale have been active in tendering, with most cargo expected to be shipped in mid-September. This suggests a significant increase in iron ore shipments to China in October. Additionally, Rio Tinto recently completed its first shipment from its expanded facilities in Western Australia, signaling a potential surge in supply and increased pressure on the iron ore market.
Despite the traditional “golden nine silver ten†season, after nearly 1.5 months of recovery, the steel market is showing signs of strain, with overcapacity and liquidity issues becoming more apparent. Prices have not risen strongly, and the market is entering a phase of adjustment. As a result, steel buyers are becoming more cautious, focusing on maintaining existing inventory levels. Imports of key materials such as iron ore, billets, and scrap may face minor adjustments. While current coal and coke prices remain relatively low, they are expected to trend upward in the short term.
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