📉 6 Steel Mills Cut Prices, Spot Steel Prices Fall Below 3500, Steel Prices Continue to Weaken

📊 Steel Spot and Futures Price Summary

On July 10th, the domestic steel market fell. The Tangshan Qian'an general square billet ex-factory price including tax dropped by 20 to 3260 yuan/ton. In terms of transactions, the decline in futures prices has intensified the pessimistic sentiment in the market, slowing down the pace of terminal purchases, frequent low-priced resources, and the overall market transaction continued to decline.

📈 Futures Price Movement

On July 10th, the main contract of rebar futures closed at 3478, a decrease of 0.91% from the previous trading day. The DIF and DEA overlapped, and the RSI indicator lines were between 28-40, operating between the middle and lower tracks of the Bollinger Bands.

🔨 Adjustments in Steel Mill Prices

On July 10th, 6 steel mills reduced the ex-factory price of construction steel by 20-30 yuan/ton.

📉 Daily Price Trends for Steel Grades

Rebar:

On July 10th, the national average price for 20mm Grade 3 earthquake-resistant rebar in 31 major cities was 3590 yuan/ton, a decrease of 19 yuan/ton from the previous trading day. In the short term, the current supply-demand contradiction cannot be fundamentally improved, and it is expected that the construction steel price will maintain a weak operation trend on the 11th.

Hot-rolled Coil:

On July 10th, the national average price for 4.75mm hot-rolled coil in 24 major cities was 3690 yuan/ton, a decrease of 14 yuan/ton from the previous trading day. Currently, the market is in a traditional off-season, and downstream rigid demand is difficult to significantly improve. On the supply side, most steel mills are at a break-even point, with no expectation of significant production cuts at present, and pig iron is at a relatively high level, with limited expectations for raw material purchases, and cost support is relatively weak. Overall, supply is strong and demand is weak, and it is expected that the price of hot-rolled coil will tend to be weak on the 11th.

Cold-rolled Coil:

On July 10th, the national average price for 1.0mm cold coil in 24 major cities was 4154 yuan/ton, a decrease of 13 yuan/ton from the previous trading day. The current off-season sales pressure on cold-rolled coil is gradually increasing, and with no significant reduction in supply, the inventory reduction speed is slow, and merchants can only choose to fall in price first to ensure transactions. In terms of mentality, the current spot market demand is flat, and merchants are cautious and slightly pessimistic about the future market. It is expected that the national cold-rolled coil spot price will be weak and stable on the 11th.

Plate:

On July 10th, the national average price for 20mm general plate in 24 major cities was 3727 yuan/ton, a decrease of 13 yuan/ton from the previous trading day. The market fluctuated downward throughout the day, the market mentality weakened, coupled with insufficient downstream purchasing strength, and the transaction performance of the whole day's plate was poor, with some market quotations slightly falling. In terms of resources, as prices adjust, the current North-South price difference has been somewhat repaired, but considering the poor market delivery, traders are not willing to stock up actively, and the amount of locked orders for North-South materials in the short term is relatively small. Overall, considering the poor demand performance, it is expected that the national plate price will continue to be weak and adjusted on the 11th.

📉 Daily Price Trends for Raw Materials

Iron Ore:

On July 10th, the prices of mainstream imported iron ore varieties at Shandong ports were weak and fell by 15-20 compared to the previous working day. On the seller's side, the enthusiasm of traders in the region to quote was average, mainly suitable for shipping, and there was little transaction in the spot market so far; the inquiry and offer sentiment in the Shandong distant month market was still acceptable, with a small amount of PB powder transactions at the end of August; on the buyer's side, some steel mills in the region replenished the warehouse as needed and maintained low inventory operations, with few inquiries. Currently, the mainstream of PB powder is between 808-813; the mainstream of super special powder is between 640-645; the mainstream of card powder is between 970-975 (unit: yuan/wet ton).

Scrap Steel:

On July 10th, the average price of scrap steel in 45 major markets was 2393 yuan/ton, a decrease of 6 yuan/ton from the previous trading day. Most of the steel mill's scrap purchase prices were adjusted downward, with an amplitude of 10-50 yuan/ton, while the base purchase price adjustment range was smaller. At present, the off-season characteristics are highlighted, the terminal demand for finished products is not good, and most areas are hot and rainy, restricting the pace of scrap steel transportation. The market has continued to decline, so the psychology of market merchants selling down and not selling up appears, and recently the arrival of scrap steel at steel mills and yards has improved. However, the difference between the waste board and the waste board continues to narrow, the steel mill is under pressure to increase production difficulty, and the scrap steel lacks cost-effectiveness compared to iron water. Therefore, overall, it is expected that the scrap steel market will continue to narrow down on the 11th, with an amplitude of 30-50 yuan/ton.

Coke:

On July 10th, the coke market price was temporarily stable. At present, the coke enterprises are mostly at a high level, some coke enterprises have approached full production, transportation and shipment are smooth, and the factory coke is running at a low inventory. On the raw material side, the price of coking coal fluctuates, and the procurement pace of coke enterprises is average, the market is still quite watchful, and the coke enterprises are cautious in procurement, maintaining low raw material inventory operations; downstream steel mill steel prices are weak, the transaction situation of finished products is not good, and the iron water output continues to rebound. The short-term coke market price is expected to be temporarily stable.

🔮 Steel Market Price Forecast

The weak trend of steel demand in the off-season is difficult to change, maintaining a weak supply and demand situation. Recently, the port inventory and port arrival volume of iron ore have continued to operate at high levels, especially the inventory of 45 ports is close to 150 million tons, and the supply and demand contradiction of iron ore has intensified, and the ore price has fallen from a high position. Due to the weak steel market fundamentals, the short-term steel price may continue to fluctuate and be weak.

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2024 Steel Price Forecast: A Tale of Two Halves

PART 01: Overcapacity in Steel and Low Smelting Profits

1. Significant Decline in Steel Consumption, Severe Overcapacity in the Steel Industry

(1) In-depth adjustment in the real estate market, infrastructure performance below expectations

The real estate market has undergone in-depth adjustments in the first half of the year, with significant declines in various indicators. From January to May, the year-on-year growth rate of major real estate indicators showed a double-digit decline. Especially the year-on-year growth rate of the completion area has turned from 17% in 2023 to -20.1% in the first five months of this year, indicating an unprecedentedly severe situation in the real estate market. According to research feedback, financial tension is still the main reason for the real estate problem. Although real estate policies have been gradually relaxed this year, the market warming signal is still not obvious. The in-depth adjustment of the real estate market has led to a significant decline in steel consumption, especially the shrinkage of construction steel consumption is more obvious.

2. Low Position of Smelting Profits, Narrowing Fluctuation Range of Steel Prices

(1) Profits of the steel industry from January to May created the lowest record in the same period of history, and the continuous shrinkage of consumption is the main reason.

From January to May, the steel industry lost more than 10 billion yuan, with more than 60% of enterprises suffering losses. According to data from the National Bureau of Statistics, the total profit of the black metal smelting and processing industry from January to May 2024 was -12.7 billion yuan, the worst period in history. The average profit margin of 247 steel enterprises from January to June was 37%, which is about 4 percentage points lower than in 2023, and the steel enterprise loss is large.

PART 02: Raw Material Profits Given Back in the First Half of 2024, Insufficient Support for Steel Prices

In the first half of 2024, both steel prices and raw material prices were weak, with raw materials falling more than steel. Coke and coal led the decline, with coking coal falling by 23.9% from the beginning of the year, coke by 21.7%, and iron ore by 21.9%. Among the steel varieties, the cold rolling price fell the most, by 12.9%, followed by rebar, with a price drop of 11.1%, and the galvanized price fell the least, by 6.3%.

PART 03: Outlook for the Steel Market in the Second Half of 2024

1. Raw materials are expected to accumulate inventory in the third quarter, continuing to drag down finished products.

2. In the fourth quarter, the intensity of industrial restocking will be enhanced, raw materials will restock first, and support the steel price rebound.

PART 04: Risk Warning

1. Under the action of energy-saving and carbon reduction, the administrative pressure production in 2024 may exceed expectations.

2. Customs tax checks or restrictions on the export of some low-priced steel may occur.