This week, ferrous metals moved sideways and upward. During the week, as US-Iran negotiations made no progress and the Strait of Hormuz remained closed, combined with declining US crude oil inventories, Brent crude oil surged sharply, driving coking coal higher. Although BHP port spot cargoes were available for purchase, which was bearish for market sentiment, futures had already priced in related expectations earlier, so iron ore pullback was limited and cost support was relatively neutral. The Politburo meeting held mid-week had low direct correlation with ferrous metals, and ferrous metals fluctuated at highs during the week. Spot market side, end-users restocked at low prices before the holiday, and as futures rose in the latter half of the week, speculative demand was also released...

In March, square billet prices in Turkey on an Ex-Works basis increased by an average of $33 to reach $538 per metric ton. The upward trend was primarily supported by strong domestic demand for scrap, surging freight rates, and rising local rebar prices, which reached $590–$610 per metric ton. During the month, the Kardemir plant sold a volume of 70,000 metric tons of billets, raising its prices by $15/t following previous consecutive cuts. Mid-month tender prices settled at $505/t for S235JR grade and $510/t for B420 grade (excluding 20% VAT).

China Steel Market: [Sheets & plates] HRC export prices today were quoted at $492-496/mt, up $2-3/mt WoW, while other sheets & plates were up $1-4/mt WoW. Recent inquiry activity for sheets & plates was moderate, and Middle Eastern Gulf countries also began requesting FOB prices. Semi-finished products side, some steel mills reported that due to delayed shipping schedules combined with rising prices, recent slab transaction performance was lackluster. [Steel Billet] Billet export FOB prices were quoted at $472-475/mt, with high-end prices at $478/mt. Shipments to the Middle East with dual-certification requirements were quoted at $490-495/mt. Prices rose relatively quickly recently, and inquiry activity and actual transaction levels fell short of those seen at the beginning of the month. [Rebar] Rebar export FOB prices were quoted at $480-485/mt, flat from yesterday. Some steel mills reported that foreign-standard rebar quotes were on the stronger side, with high-priced resources difficult to transact. International Steel Market: [India] HRC export offers to the EU increased to ~$705/t CFR, mainly due to higher freight costs. Logistics disruptions (Red Sea, Suez, Hormuz) forced rerouting via the Cape, extending transit times and reducing competitiveness, while no deals were concluded as buyers remained cautious. Market sentiment is weak to cautious, with stalled Middle East trade and pressure from high freight costs and unclear demand. [UAE] Emirates Steel, a UAE-based steel company, has maintained the list price of 12-32mm diameter rebar for May delivery in the domestic market at 2,720.87 UAE dirhams per ton (USD 741) ex-works, the same as in April. [EU] A steel mill in Germany has announced that its rebar price will increase by $60 per ton to $835 per ton; a steel mill in Italy has indicated that the increase may exceed $60 per ton, with the latest price expected to exceed $860 per ton. In terms of driving factors, steel mills generally face rising energy costs, while tightened EU import protection (including CBAM costs and new measures effective from July) has strengthened the pricing power of European domestic steel mills. Although there are still large inventories of imported products in some markets, which may suppress short-term orders, under the combined cost pressure and policy support, the significant price increase is expected to be accepted by the market by mid-May.

This week, ferrous metals fluctuated downward, with raw materials declining significantly more than finished steel. Cost-side logic weakened further during the week. Mid-week, both the U.S. and Iran indicated they had entered the final stage of finalising negotiation details, causing crude oil in the overseas market to plunge and dragging down the coal sector. In the latter half of the week, rumors emerged that negotiations between China Mineral Resources and BHP would be announced next week, with iron ore leading the downward trend. On the finished steel side, inventory of the five major steel products continued to destock, in a structure of both rising supply and demand. Spot market side, futures were weak, end-user purchasing enthusiasm was lukewarm, the spot-futures price spread widened somewhat, and some market arbitrageurs between futures and spot began to take profits...

The planned rebar production in April was 8.0385 million mt, an increase of 103,500 mt or 1.30% from the actual production in March. The planned wire rod production in April was 2.9614 million mt, a decrease of 128,700 mt or 4.16% from the actual production in March. In April, the long product export scheduled production of sample steel mills was 791,000 mt, up 79,000 mt MoM, of which the steel billet export scheduled production was 420,000 mt, up 110,000 mt MoM.

This week, ferrous metals were in the doldrums. The main logic during the week was still the weakening of cost support. On Tuesday, Iran proposed to levy transit fees on the Strait of Hormuz, while Trump released conciliatory remarks that he was "willing to end military action against Iran even if the Strait of Hormuz remains largely closed." Market expectations for tightening crude oil supply weakened, the energy sector declined and dragged down the coal sector, and the cost logic weakened. During the week, inventory of the five major steel products continued to decline, but apparent demand remained at low levels compared to the same period in previous years, and fundamentals provided limited impetus for futures. Spot market side, market enthusiasm for purchasing was lukewarm, with restocking mainly at low prices. Spot prices remained relatively firm, and the spot-futures price spread widened...

Inter-product price spreads are a segment of the rebar spread system characterized by complex logic and abundant trading opportunities. Unlike the spot-futures price spread, which reflects the spot-futures structure, and calendar spreads, which reflect near- and far-term expectations, the core of inter-product price spreads lies in macroeconomic structural adjustment and profit distribution across the industry chain. From the perspective of the industry chain, inter-product price spreads for long steel products are mainly concentrated in the following four areas:

[SMM Operating Rate of Steel Mills Using Externally Purchased Billets] According to the SMM survey, as of March 31, the operating rate of steel mills using externally purchased billets mainly producing construction steel stood at 27.39%, up 27.39 percentage points MoM from February and up 5.25 percentage points YoY. National construction steel prices fluctuated downward in March. Rebar prices reached 3,167 yuan/mt on March 23, the highest price of the month, and 3,131 yuan/mt on March 4, the lowest price of the month. After the Lantern Festival, downstream construction sites gradually resumed work, market demand gradually improved, and end-users' just-in-time procurement increased slightly. Cost side, affected by multiple macro factors, the coal market as a whole showed a pattern of being more likely to rise than fall. At some coal mines in producing areas, production release was hindered by factors such as working face replacements, leading to a slight contraction in supply, while downstream procurement demand remained robust. Auction transaction premiums were obvious, further supporting stronger coal prices. As cost pressure was passed on, coke enterprises showed a strong willingness to hold prices firm, and expectations for a new round of coke price increases to be implemented heated up, which will likely be gradually realized in the near term. Raw material prices are expected to fluctuate upward in the short term, and cost support for steel remained in place. Supply side, blast furnace steel mills currently maintained a stable production pace, with production remaining relatively steady; EAF steel mills resumed production in an orderly manner as planned, and the capacity utilization rate continued to rebound. As of March 24, the operating rate of 50 electric furnace steel mills nationwide mainly producing construction steel was 40.42%, up 1.78% from the previous period. Billet-rolling mills also gradually resumed work after the Lantern Festival, and the operating rate of steel mills using externally purchased billets was 27.39% this month, up 27.39% MoM, driving a rapid increase in overall market supply. Demand side, downstream construction sites were gradually resuming work, and market demand increased somewhat. However, dragged down by end-user steel consumption volumes and tight cash flow at end-user enterprises, the market remained cautious about the outlook. Downstream construction sites and traders mainly purchased as needed, and the strength of demand recovery was weaker than in the same period in previous years. Overall, after the Lantern Festival, both supply and demand increased, and the supply-demand imbalance was not yet prominent. As temperatures gradually recover and terminal construction conditions improve, the rebar supply-demand pattern is expected to improve mildly, and inventory is likely to continue declining. However, constrained by funding conditions, the room for incremental demand should not be viewed overly optimistically. Therefore, the increase in the operating rate of billet-processing enterprises in April is expected to be limited, and the room for overall supply growth is relatively small.

This week, ferrous metals retreated after a rapid rise. At the beginning of the week, the market reported last week that Asia had shifted to coal-fired power generation due to a natural gas supply deficit, and that Indonesia would increase coal production and impose export taxes. The rise in international coal prices transmitted to China, with coking coal and coke leading the ferrous metals higher. Mid-week, the Middle East situation fluctuated, with the U.S. and Iran holding divergent attitudes toward war, and ferrous metals consolidated at highs. The pullback in the second half of the week was mainly driven by weakening cost-side logic. Market rumors suggested that iron ore long-term contract negotiations had been completed, expectations of iron ore supply tightening diminished, and raw materials shifted to a pullback-driven trend. Spot market side, speculative activity and end-user purchase enthusiasm improved in the first half of the week, while the second half continued to be dominated by rigid demand, and the spot-futures price spread widened somewhat...

As supply and demand for construction steel were not fully matched across different markets, regional supply-demand mismatches created price differentiation, which in turn drove the cross-regional circulation of steel resources. When the regional price spread gradient was appropriate, regions with surplus construction steel capacity and production often shipped excess resources out, thereby rebalancing construction steel resources across regions.