Steel: demand may peak at stageCrashboombanggameThe supply is still expected to increase

Demand: infrastructure investment increased by 6% in the first quarter, according to the Bureau of Statistics.Crashboombanggame.5%, investment in manufacturing increased by 9.9%, investment in real estate development decreased by 9.5%. According to the sub-index of real estate, in the first quarter, the area under construction decreased by 11.1% compared with the same period last year, the area of new construction decreased by 27.8%, the area completed by construction decreased by 20.7%, and the sales area of newly built commercial housing decreased by 19.4%. At present, real estate is still a major drag on steel demand, manufacturing, infrastructure show strong resilience. In the first quarter, new special bonds issued by local governments totaled about 634.1 billion yuan, down about 53% from the same period last year, and the progress of bond issuance was only 16%, much lower than the 35% in the same period last year. The NDRC said that it has completed the selection of local government special bond projects in 2024, with a total of about 38000 special bond projects and a demand of about 5.9 trillion yuan in 2024, laying a solid project foundation for the issuance and use of 3.9 trillion yuan of special bonds this year. With the completion of the examination and approval of the local special debt project, it is expected that the local authorities will speed up the process of issuing special bonds in the second quarter, which will give a certain boost to demand. However, from the seasonal point of view, hot coil demand may have peaked, thread demand will also peak in May, later demand may have a certain decline in expectations.

Supply: hot metal output rebounded for four consecutive weeks in April, reaching 2.287 million tons in the latest week, up 74000 tons from the end of March. The thread weekly output rebounded obviously in April, and the thread weekly output reached 2.22 million tons at the end of April, an increase of about 120000 tons over March. all the incremental contributions were long processes, while the output of short processes also decreased. Hot coil production fell slightly in April, and the flow of hot metal from thread to hot coil basically ended when the thread price increased more than that of hot coil. As the profits of steel mills improve, hot metal output is expected to have some room to pick up in May, thread, hot coil output may increase.

Inventory: in April, the inventory of the five major varieties decreased by 4.01 million tons, of which the inventory of threads and hot rolls decreased by 2.7 million tons and 210000 tons respectively. At present, the total inventory of the five major varieties decreased by 1.06 million tons over the same period last year, of which the inventory of threads decreased by 1.28 million tons compared with the same period last year. Hot coil inventory increased by 850000 tons. April thread inventory decline faster than seasonal, hot coil inventory decline is slow, hot coil inventory pressure is relatively large, plate inventory pressure increases, steel price trend is still restrained to some extent.

Cost: iron ore prices rebounded sharply in April, port PB powder prices rose by about RMB1300.Coke completed two rounds of increases of RMB2000.The rise in raw materials brought about a rise in steel mill costs of about RMB3200.The cost increase was greater than the increase in steel prices. However, taking into account the inventory of raw materials, the overall profits of steel mills have improved, with 247 steel mills making profits of 50.65% at the end of the month. At present, the third round of coke rise is in progress, the performance of iron ore is still strong, and the cost has a certain support for steel prices.

Conclusion: at present, the improvement of thread supply and demand is obvious, but there is some pressure on plate supply and demand. Overall steel demand is expected to peak in May, but supply is still expected to rise, and steel supply and demand pressure may be apparent. However, at present, there are still further loose expectations at the policy level, and the cost of raw materials such as iron ore and coke continues to rise, giving a certain boost to the trend of steel prices. It is expected that the overall steel price in May will show a weak concussive operation trend.

Iron ore: the margin of supply and demand continues to improve, pay attention to the change of demand in May

On the supply side, global shipments declined in April compared with the previous month, while those in Australia and non-mainstream shipments both declined. As of April 21, global weekly shipments averaged 28.83 million tons, up 4 per cent from a year earlier and down 6 per cent from a month earlier. Australia's weekly shipments averaged 17.1 million tons, up 3 per cent from the same period last year and down 7 per cent from the previous month. The average weekly shipping volume of other countries except Australia and Pakistan was 5.26 million tons, an increase of 5 per cent over the same period last year and a decrease of 9 per cent from the previous month. The average weekly shipping volume in Brazil was 6.46 million tons, an increase of 6% over the same period last year and 0.7% month-on-month. In April, the shipments of Rio Tinto and FMG decreased, while those of BHP and VALE increased. In April 45, the number of port arrivals increased compared with the previous month, and is now higher than that of the same period in previous years. In April, the utilization rate of mineral energy and the output of iron concentrate powder have increased, which is at a high level in the past five years.

On the demand side, overseas demand remained stable, with an average daily output of 2.352 million tons of crude steel and 1.15 million tons of pig iron except China in March. In terms of domestic demand, the profits of long process steel mills continued to improve in April, and the profitability of steel mills also continued to pick up. Steel mills continued to resume production, and hot metal output continued to pick up, increasing by 74100 tons to 2.2872 million tons at the end of the month compared with the end of last month. The operating rate of blast furnace and the utilization rate of capacity increased to 79.73% and 85.53%. Demand continued to improve and spot transactions at the port increased. The daily consumption of imported mines has continued to increase to 2.7947 million tons, and the dredging volume has also continued to rise to 3.0096 million tons.

In terms of inventory, the extent of port inventory accumulation has slowed down. The port inventory in April was 3.28 million tons to 14759 tons higher than that at the end of last month, with an increase of 5 ships. The inventory of steel mills in April was 2.31 million tons higher than that at the end of last month, and the current consumption ratio of imported mines is 33.56.

Looking forward to May, the seasonal disturbance factors on the supply side will weaken, the shipping volume is expected to pick up somewhat, and the incoming port volume will maintain a medium-high level. Domestic production is expected to maintain a medium-to-high level. On the demand side, steel mills will continue to resume production in the short term, and hot metal output is expected to rise to more than 2.3 million tons, but we should pay attention to the speed of steel destocking on the demand side and the profits of steel mills. In May, it is expected that the port inventory will begin to go to the warehouse, and prices may show a volatile trend.

Coal coke: the output of hot metal is still expected to pick up, and the performance of coal coke may be on the strong side.

In terms of coke, after eight consecutive rounds of lifting and falling in the early stage, the spot coke ushered in a turnaround in mid-April, and so far it has been raised and landed for three consecutive rounds, and the coking plant is expected to launch the fourth round of increase before May 1st. On the supply side, coke production in the first quarter was 119.89 million tons, down 0.5 per cent from a year earlier, according to the National Bureau of Statistics, of which coke production in March was 39.37 million tons, down 6 per cent from a year earlier. As of April 26, the capacity utilization rate of independent coke enterprises in all samples of Mysteel was 64.97%, an increase of 0.55%; the average daily output of coke was 598300 tons, an increase of 3700 tons month-on-month, and coke inventory was 950000 tons, a month-on-month decrease of 102600 tons. On the demand side, steel production rebounded steadily in April. As of April 26, Mysteel surveyed 247 steel mills with an average daily hot metal output of 2.28731 million tons, an increase of 25000 tons from the previous month, a decrease of 148200 tons over the same period last year, and a blast furnace operating rate of 79.73 percent, an increase of 0.87 percent over the previous week and a decrease of 7.27 percent over the previous year. The average amount of hot metal in April was 2.2582 million tons, an increase of 40900 tons over the previous month. In terms of inventory, the coke inventory of independent coking plants and steel mills decreased significantly in April, the port coke inventory increased slightly, and the total coke inventory decreased. Looking forward to May, the overall coking enterprises are still in a loss situation, the output recovery space is limited, the hot metal output still has a further recovery, and the steel mills still have a demand for coke replenishment. It is expected that coke supply and demand will remain tight in May, and the disk price may be on the strong side.

In terms of coking coal, coking coal prices fell first and then rose in April, with the first round of coke rise on April 12 as a watershed, which continued to weaken before, and then significantly strengthened, with different coal prices rising 60-200 yuan for the whole month. On the supply side, coking coal production shrank slightly in the first quarter, and imports of coking coal continued to supplement the shortfall. According to the latest data from the General Administration of Customs, China's imports totaled 26.8899 million tons in the first quarter of 2024, up 20.75% from a year earlier. Mongolia and Russia still rank first in coking coal imports, with a total import of 20.3249 million tons, accounting for 75.58 per cent of the total. The United States, Australia and Canada took second place, accounting for 7.3%, 6.73% and 6.24%, respectively. In May, the coal mine production capacity in the region is difficult to increase greatly, and it will continue to give priority to ensuring safety in production, and the overall supply increment is limited. On the demand side, the hot metal output of steel mills has increased steadily, coke has been raised and landed for three consecutive rounds, and there are still further expectations in May, the production enthusiasm of coke enterprises has improved, and the demand for replenishment of coking coal has increased. In terms of inventory, coking coal stocks in independent coking plants rose significantly in April, port coking coal stocks also increased, coal washing plants and steel mills coking coal stocks decreased, and total coking coal stocks increased, but still at a low level. On the whole, the supply and demand of coking coal in May is still expected to be tight, and disk price shocks are expected to be strong.

Scrap: scrap prices are expected to maintain a high fluctuating trend in May and pay attention to the changes in downstream demand.

Scrap prices rose in April, rising in all regions, and rising sharply in East and South China. Shagang raised its price twice.

On the supply side, the volume of goods arrived in April decreased first and then increased, and the average daily delivery volume decreased compared with the previous month. As of April 26th, April 255 steel mills have received a total of 7.93 million tons of scrap steel, with an average daily delivery capacity of 410000 tons. In April, the operating rate, capacity utilization rate and output of scrap scrap processing enterprises increased.

On the demand side, with the continuous improvement of downstream demand in April, the demand for scrap also continued to increase. At the end of April, the daily consumption of scrap in 255 steel mills rebounded to 490000 tons, of which the daily consumption of short-flow steel mills increased to 140000 tons, and that of long-process steel mills increased to 253000 tons. The operating rate and capacity utilization of 49 electric furnace factories decreased first and then increased, and decreased slightly at the end of the month compared with the end of last month. In terms of profits, the profits of short-process steel mills have improved, but they are still facing losses. The price difference between hot metal and scrap has widened.

On the inventory side, the scrap inventory of short-process steel mills is 113300 to 1.466 million tons in April, and that of long-process steel mills is 190000 to 1.92 million tons.

Looking forward to May, the arrival volume of scrap steel has increased significantly, and the supply side has shown an increasing trend. On the demand side, with the continuous improvement of the demand for finished products and the profits of steel mills, the production willingness of steel enterprises is enhanced. And the price of iron ore and coke has also risen, and the performance-to-price ratio of scrap steel has been improved. Scrap prices are expected to maintain a high shock trend in May, paying attention to the changes in downstream demand.

Ferroalloy: problems in the transportation of manganese ore, driving the price center of gravity up

Manganese silicon: there are problems in Australian ore shipping, manganese ore prices have risen sharply, and the cost has driven up manganese silicon prices. Australia has recently been affected by Tropical Cyclone Megan. South32 said in its latest quarterly report that due to the tropical cyclone, the GEMCO terminal has been damaged, and the damaged terminal and infrastructure design repair work is continuing. Terminal operation and export sales are expected to resume in the first quarter of 2025, and alternative shipping options will be evaluated at the same time to mitigate the impact of terminal outages. According to estimates, the incident affected Australian manganese ore shipments of more than 2.8 million tons, accounting for nearly 10% of China's manganese ore imports. Affected by this, the spot quotation for manganese ore continued to rise, with a monthly increase of more than 40%. The spot merchant is closed for a rise. In addition, the recent increase in steel prices, the demand side also has a certain release, the current range of about 400-500 yuan / ton, although the current demand is still at the historical low level, but the supply and demand level is improving marginally. Generally speaking, the problem of Australian mine export is difficult to solve in a short time. If there is no alternative means of transportation, the port Australian mine inventory may be exhausted by the end of July, and the import cost of manganese ore still has some room to increase. Under the strong support of the cost side, it is expected that the resumption of production will also be subject to certain restrictions. It is expected that short-term manganese silicon prices still maintain a strong trend of volatility.

Ferrosilicon: marginal improvement in supply and demand, production costs and profits have rebounded, and the center of gravity of ferrosilicon prices has moved up slightly. On the supply side, the operating rate of ferrosilicon production enterprises is lower than that at the end of last month. In the latest week, the operating rate of ferrosilicon production enterprises is 30.23%, and the average daily output is 12973 tons, which is still in the cycle of month-on-month decline and is at a low level in the same period in history. Supply continues to contract. With the increase of production cost, the production profit is still expanding. at present, except Gansu, the other main producing areas of ferrosilicon are in a profitable state, the profit is about 100-200 yuan / ton, and the profit of ferrosilicon production is still better than that of manganese silicon. On the demand side, during the steel recruitment period, the demand has been released to a certain extent, and the apparent demand has bottomed out, but high-frequency data show that the demand for ferrosilicon is still at a low level in the same period in history, and it still takes time for the demand to recover. In terms of inventory, ferrosilicon inventory of 60 sample enterprises continues to decline, the number of available days has been low in the same period in history, ferrosilicon inventory pressure is better than manganese silicon, the willingness to replenish the inventory is not strong. Overall, the recent market sentiment has improved, the marginal recovery of demand and cost support, it is expected that short-term ferrosilicon prices may still show a strong shock trend, the recovery of terminal demand needs continuous attention.

Attention: related policies, demand performance.