**Cold Fall in the Steel Market: A Dilemma for Steel Prices**
This week, the steel market experienced a mixed trend, with fluctuations across different segments. Let’s break down the current situation and expectations for the coming days.
**Raw Materials:**
The Tangshan billet market saw an initial strong start followed by a decline. After a rebound, prices fell by 10 yuan, then rose again by 10, and ended up 20 yuan higher compared to last week. Despite the weak transaction volume, the market remained optimistic due to the approaching Golden September period. However, the drop in temperature and the lack of strong demand have led to a slight downturn in billet sales. The high cost of raw materials and tight spot supply provide some support to the market, keeping the outlook relatively stable. The margin is expected to remain between 10-30 yuan per ton.
The iron ore market was relatively quiet this week, with the Platts Index falling by $1 due to weaker bidding from foreign mines. Spot prices remained steady, while some steel mills reduced their prices slightly. However, the response to these price cuts was not strong. This week, some mills increased prices by 5-10 yuan/ton. Domestic mines are expected to remain stable, with slight increases in certain regions. Imported ore is likely to oscillate around $138 per ton.
Coke prices continued to rise, increasing by 20-50 yuan/ton due to stronger downstream demand. Steel mills were active in purchasing coking coal, leading to higher coke prices. Hebei Iron and Steel Group raised its coke prices by 50 yuan/ton, boosting local confidence. With the National Day and Mid-Autumn Festival holidays approaching, steel demand is expected to increase further. Coke prices are likely to continue rising next week, by 20-30 yuan/ton.
The scrap market saw a slight increase as some manufacturers raised prices to attract more sources. However, the early phase of "Jinjiu" (Golden September) was slightly weak, and large steel enterprises saw only marginal improvements in arrivals. As a result, the market remains uncertain, with limited growth potential. Buyers are cautious, and sellers are not eager to sell at lower prices. It is expected that the scrap market will remain weak in the near term.
Pig iron prices were stable but slightly stronger this week. Raw material and finished product prices remained narrow, with a wait-and-see attitude from the market. Some steel mills struggled to get goods at low prices, and turnover was poor. However, high costs supported prices, and merchants were reluctant to reduce prices significantly. The pig iron market is expected to remain stable next week.
**Steel Products:**
The Tangshan rebar market initially rose after a period of suppression. With eased financial pressure and cost support, prices gradually increased. However, weak follow-up demand led to a return to weaker prices. Although some markets saw increased stock levels, all parties are under pressure and hesitant to make major adjustments. Steel prices are expected to fluctuate next week, with a possible downward trend.
Tangshan profile steel began the week with some volatility but faced a weaker trend due to high transaction volumes. Environmental policies have restricted billet supply, and higher procurement costs have put pressure on profile steel mills. While some mills tried to lower prices, they were not very aggressive. Later in the week, heavy volumes and increased shipping pressures caused confidence to wane. Low-cost resources surged on Thursday, and the weak demand for "Jinjiu" revised market sentiment. Suppliers face pressure from both fundamentals and news, and the market is expected to remain weak next week, though the decline may be limited due to high costs.
Tangshan pipe markets were stable and slightly stronger this week. Seamless pipes remained stable, while welded pipes rose by 20 yuan/ton. Raw materials became tighter, supporting prices. However, terminal procurement remained sluggish. Pipe mills were willing to raise prices, but actual demand was weak. As weather cools, construction activity is expected to increase, boosting pipe demand. However, businesses remain cautious, focusing on small-scale purchases. The market is expected to slowly move upward, with a potential increase of 50 yuan/ton next week.
The steel strip market saw a slight increase, with leading mills raising prices by 40-50 yuan/ton. However, transactions weakened after the initial rise, and prices stabilized later in the week. During the "Golden September" period, suppliers restocked, but steel mill maintenance increased, reducing short-term output. This supported prices. It is expected that the strip steel market will remain stable or slightly weak next week.
**Current Operation Suggestions:**
For raw materials, it is recommended that businesses replenish small amounts weekly, seize opportunities, and ensure timely delivery. Traders should operate based on single transactions and purchase strategically.
For steel products, the market has seen slight declines, with weak gains. Low-cost resources continue to impact mainstream prices. Merchants should focus on de-stocking, optimize inventory, and adopt a fast-in, fast-out strategy to manage risks effectively.
**Tangshan Market Overview:**
Raw materials in Tangshan were mixed this week. While some steel companies slightly increased their purchase prices for iron ore fines, the overall market remained subdued due to weak demand for finished products. Middlemen were less active, and the market saw limited operations. Iron ore prices remained stable, while coke and furnace burden prices rose slightly. Strong downstream steel demand and rising manufacturing indices provided support. However, weak transaction volumes and light trading activity affected the billet market.
Finished steel products in Tangshan weakened this week. The 145 strip fell slightly, and weak steel bills and lack of transaction support led to a weaker trend. Although some pipe manufacturers had limited stock, order acceptance remained challenging. Prices adjusted according to raw material and strip price changes, and sales were maintained. Downstream building material purchases remained weak, though some low-cost resources improved slightly. Weak steel bills pushed prices back into a weaker trend. Demand for "Jinjiu" was weaker than expected, and profile transactions did not see significant delays. Cost weakness continued to weigh on the market.
**Industry News:**
1. **China's Stainless Steel Output in 2020 Expected to Exceed 25 Million Tons:** 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 exceed 25 million tons in 2020, with apparent consumption surpassing 20 million tons. Long-term economic goals such as industrialization, urbanization, and environmental protection are expected to drive growth in the stainless steel industry.
2. **Coal Prices Show Mixed Trends:** Some coal prices rose in the second half of the year, offering hope for a price rebound. However, overall coal prices are expected to continue declining due to increased supply and imports. Demand is expected to grow slightly, but the market will remain oversupplied, with high inventories continuing to exert downward pressure on prices.
3. **Labor Disputes Continue at Shougang's Peruvian Mine:** Workers at Shougang Hierro Peru initiated indefinite strikes in mid-August over wage and working condition demands. Negotiations broke down, leading to ongoing disputes. These issues have caused significant economic losses and highlight challenges in operating overseas mining facilities.
4. **Iron Ore Shipments Rise in Australia:** Port Hedland’s iron ore shipments in August reached 27.4 million tons, up from 26.6 million in July. China’s August imports of iron ore rose to 22.3 million tons, indicating a recovery in the Chinese economy. Bloomberg reported that China’s manufacturing sector resumed growth, suggesting economic stabilization and a potential GDP growth of 7.5% in 2013.
In summary, the steel market faces challenges but also opportunities. With seasonal demand and policy support, the market is expected to remain volatile, requiring careful management and strategic decision-making.
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