Futures markets rose across the board, with coking coal and coke leading the gains.
Domestic ferrous metal futures markets continued their upward trend today, with most contracts closing higher. Coking coal performed the strongest, with the main contract closing at 1629.5 yuan/ton, up 39 yuan, or 2.45%; coking coal closed at 1096.5 yuan/ton, up 20 yuan, or 1.86%. Rebar, hot-rolled coil, and iron ore also rose, closing at 3133 yuan/ton, 3325 yuan/ton, and 800.5 yuan/ton respectively, with gains ranging from 0.35% to 2.45%. Analysts pointed out that the rise in coking coal and coke was mainly due to supply-side disruptions. Although the gains were slightly smaller than yesterday, the upward trend continued.
Spot prices rose steadily, with construction materials performing particularly well.
The spot market as a whole showed a steady upward trend, with construction steel leading the gains. According to monitoring, among 31 building materials markets nationwide, 21 saw price increases, ranging from 10-30 yuan/ton, with the average price at 3330 yuan/ton, up 10 yuan/ton from yesterday. Prices for hot-rolled coil, strip steel, and medium-thick plates remained stable, with some local increases of 10-20 yuan/ton, but the average price only rose slightly by 1-2 yuan/ton.
Today, steel mills adjusted prices more frequently, with approximately 25 mills raising their ex-factory prices for building materials by 10-50 yuan/ton. Regionally:
Northwest China: Shaanxi Steel, Bayi Steel, and other steel mills raised prices by 10 yuan/ton;
North China: Jinzhou Steel, Donghua Steel, Jinan Steel, and other steel mills raised prices by 10-30 yuan/ton for some product categories;
East China: Shandong Steel, Yongfeng Steel, Maanshan Steel, and other steel mills raised prices by 20-30 yuan/ton for some product categories;
Southwest China: Kunming Steel, Yukun Steel, Desheng Steel, and other steel mills raised prices for rebar, wire rod, and coiled rebar by 30 yuan/ton; Shuangyou Steel and Qujing Hengte raised prices for similar products by 50 yuan/ton due to shortages of certain specifications in Yunnan and Guizhou.
Driven by Price Increases: Supply Contraction and Cost Push
This round of steel price increases is mainly driven by the following factors:
Continued Tightening of Supply
Since the end of November, news of steel mill shutdowns for maintenance has been constant. In addition to the seven steel companies in the Baowu Group, 14 other steel mills have successively announced maintenance plans, with the longest maintenance period reaching 45 days. Industry research indicates a significant shortage of certain specifications among major steel mills in the Yunnan-Guizhou region. For example, Guizhou is experiencing almost complete shortages of wire rod, while Yunnan is facing severe shortages of 8mm diameter coiled rebar and 14mm, 16mm, 20mm, and 22mm diameter rebar, with inventories continuing to decline and unlikely to ease in the short term.
Raw Material Costs Rise: Coking coal supply remains tight due to factors such as safety inspections. Recently, the Henan branch of the National Mine Safety Administration ordered the Xinzhuang Coal Mine of Henan Shenhuo Coal and Electricity Group to suspend production for rectification; a 1.8 million-ton capacity coal mine in Inner Mongolia has been included in its 2025 exit plan. Affected by safety supervision in major producing areas and the implementation of new environmental regulations in Shanxi, the operating rate of domestic coking coal mines is unlikely to increase significantly, and imported Mongolian coal cannot fully fill the gap, driving up coking coal and coke prices.
Macroeconomic Expectations and Demand Support: On the macro level, market expectations for a December interest rate cut by the Federal Reserve have strengthened. Meanwhile, the issuance of local government bonds in China has exceeded 10 trillion yuan for the first time, and the increased issuance of special-purpose bonds has boosted expectations for future infrastructure demand. However, the ninth consecutive month of contraction in US manufacturing activity reflects the continued uncertainty in the external environment. Tomorrow’s Outlook: Stable with a Slight Upward Bias, but Gains May Narrow
Analysts believe that the current rise in steel prices is mainly supported by supply contraction and cost increases, but spot price increases have already narrowed, and follow-through transactions for high-priced resources are limited. Without further positive stimulus, the momentum for continued price increases will gradually weaken. It is expected that steel prices will remain stable tomorrow, with some regions or varieties still having room for slight increases of 10-20 yuan/ton, resulting in an overall stable-to-slightly-strong oscillating trend.
Note: Reprinted from Steel.com
