Morning Ferrous Markets
Market Overview
Recent fluctuations in the ferrous markets have been driven by a mix of geopolitical and economic factors, resulting in pronounced volatility. Concerns over China's property market and the reapplication of 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 weakening demand, impacting global price trends. These developments, coupled with 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 U.S., the Federal Reserve's favored inflation gauge cooled in April, with consumer spending unexpectedly dropping, supporting plans for an eventual reduction in interest rates. This complex environment forces futures traders and industry stakeholders to navigate regulatory changes, global economic uncertainties, and shifting supply-demand dynamics.
Upcoming Data Releases
US HRC Steel: Market Dynamics and Price Trends
The US steel market is experiencing downward pressure due to declining benchmark prices, with SMU and Platts reporting drops to $760/st and $750/st, respectively. Nucor's CSP slightly increased to $770/st. The upcoming reapplication of Section 232 tariffs is expected to significantly alter import volumes and pricing structures. The Federal Reserve’s favored inflation gauge moderated in April, with inflation-adjusted consumer spending unexpectedly falling by 0.1%. Wage growth also cooled, contributing to broader economic uncertainties. These dynamics, including the cautious economic outlook and lower consumer confidence, are influencing the North American steel market's direction and pricing. Notably, US HRC prices showed mixed movements: November-24 contracts increased by 1.56% to $845.0 USD/T, October-24 contracts rose by 0.72% to $840.0 USD/T, while August-24 contracts decreased by 1.58% to $810.0 USD/T.
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
China’s steel market faces volatility due to the government's policy to constrain steel mill capacity to conserve energy and reduce carbon emissions. Steel production in China dropped by 10 million tons in the first four months of 2024, impacting demand for iron ore. Despite China’s $42 billion initiative to stabilize the housing market, iron ore prices have continued to retreat. Record iron ore exports from Brazil and Australia in April have exacerbated Chinese iron ore surpluses, pushing futures in Singapore down 3.1% to $115.25 per ton. Additionally, SGX iron ore prices fell by 1.63% to $113.6 USD/MT for July-24 contracts and by 1.6% to $113.6 USD/MT for June-24 contracts. These factors, combined with high inventories at Chinese ports, are creating downward pressure on prices.
SGX Iron Ore CFR China (62%) Futures
StoneX & Bloomberg
Turkish Steel Scrap: Supply Constraints and Rising Costs
The European steel market, particularly EU steel scrap, is under pressure from tight supply and elevated prices. Despite rising scrap prices by 9% in Europe, industrial profits in China’s equipment manufacturing and consumer goods manufacturing sectors grew significantly, affecting supply dynamics. The utility sector’s profit surged by 36.9% in the first four months of 2024, driven by electricity production. The Chinese market's robust performance, with industrial profits up 4.3% year-over-year, underscores the interconnectedness of global steel supply and demand.
Turkish Scrap 1st Month Futures
StoneX & Bloomberg
Current Prices
StoneX & Bloomberg
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