Morning Ferrous Markets
Market Overview
Recent fluctuations in the ferrous markets have been influenced by a mix of geopolitical and economic factors, leading to pronounced volatility. Concerns over China's property market and U.S. tariffs on Chinese steel have added pressure on iron ore and steel futures. Additionally, stockpiling in Chinese ports during a traditionally strong demand season signals a weakening demand, impacting global price trends. These developments, alongside ongoing adjustments in global trade policies and market uncertainties in major steel-producing nations, have tightened physical markets and shaped near-term expectations in the ferrous metals sector. These elements combine to create a complex environment for HRC steel, where futures traders and industry stakeholders must navigate a landscape marked by regulatory changes, global economic uncertainties, and shifting supply-demand dynamics.
Upcoming Data Releases
US HRC Steel: Market Dynamics and Price Trends
The US HRC steel market is currently under downward pressure, with benchmark prices showing a decline—SMU reporting a decrease to $760/st from $775/st and Platts to $750/st from $760/st, amidst a slight increase in Nucor's CSP to $770/st. The impending reapplication of Section 232 tariffs, which reintroduces a 25% duty on previously exempt steel products effective July 1, is expected to impact import volumes and complicate pricing strategies. These benchmark prices and regulatory shifts, coupled with a global oversupply of iron ore and economic instabilities in China's property market, fosters a bearish outlook and reflected in technical indicators for US HRC steel—a wedge shape with a downward trajectory over the next 2-8 weeks—a cautious trade signal. Despite increased trading activity week over week, prices are down $3 day over day. Price crossed the 200 day rolling average on April 29 indicating a potential trend reversal to a downward trend.
HRC Front Month 3 Day Trend
StoneX & Bloomberg
HRC Front Month 6 Month Price Trend
StoneX & Bloomberg
SGX Iron Ore: Volatility, Demand Uncertainty, and Supply Surpluses
Iron ore markets are experiencing heightened volatility, driven by China's faltering real estate sector and global oversupply. Despite China’s $42B initiative to stabilize the housing market, iron ore prices continue to retreat. Recent record exports from Brazil, at nearly 30 million tons, and Australia, nearing 50 million tons, have exacerbated Chinese iron ore surpluses. This surplus, combined with government pledges to constrain steel mill capacity, has pushed Singapore iron ore futures down 3.1% to $115.25 per ton, marking the lowest level in two weeks. Prices in Dalian dropped 2.9%, while steel contracts in Shanghai also declined. The mismatch between supply and demand, with China's stagnant steel production and high inventories, underscores the ongoing challenges in balancing global supply. These dynamics reflect broader market uncertainties and the impact of extensive global supply on pricing dynamics.
SGX Iron Ore CFR China (62%) Futures
StoneX & Bloomberg
Turkish Steel Scrap: Supply Constraints and Rising Costs
The Turkish steel scrap market is feeling the pinch from a tightened supply that has driven up prices and adversely affected stainless steel spreads across Europe, pushing them into loss-making territory. A 9% increase in scrap prices in Europe, spurred by reduced industrial output and a surge in nickel prices by 21% since March, illustrates the acute supply challenges faced by European producers. This scenario is mirrored in the US, where despite robust apparent consumption, there is a noticeable moderation in demand. Trade activity in all futures contracts have noticeably increased in recent weeks; however price volatility is mild and trading within a 0.50 USD range, while futures contracts inched down slightly through September day over day.
Turkish Scrap 1st Month Futures
StoneX & Bloomberg
Current Prices
StoneX & Bloomberg
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