Affected by the news of production cuts at the steel mills, ferrous metal prices continued to fall today, with iron ore futures down 3.26 percent to 844.5 yuan/mt as of 10:20 CST, down eight days in a row.
The decrease was mainly driven by weak recent demand and weak market sentiment. At the same time, pessimism in the market intensified due to the expected production cuts by steelmakers. There was a wait-and-see sentiment in the spot market yesterday. In Shandong, PB powder transaction prices were at 930 yuan/mt, down 10 yuan/mt from the previous day, while super special fines were sold at 785-788 yuan/mt. In Tangshan, PB powder transaction prices stood at 935 yuan/mt, down 5-25 yuan/mt from the previous day, while super special fines were sold at 798 yuan/mt.
According to SMM statistics, as of June 15, the blast furnace operating ratio decreased by 0.66 points to 81.34 percent, mainly due to the increase in coke prices and the decline in finished product prices, which caused losses for steelmakers.
According to the SMM survey, steelmakers who currently do not have blast furnaces have largely stopped production due to losses. Although the current pig iron output of the blast furnace steelmakers is still at a high level, they have recently suffered losses due to the 300 yuan/mt increase in coke prices.
Steelmakers' enthusiasm for production has weakened, which, combined with weak downward demand, has forced some mills to fire their blast furnaces hot. Steel companies that are currently reducing production are mainly located in northeastern, northern and central China. According to the SMM survey, more factories in northern China will have their blast furnaces serviced in the next two weeks. Steel mills in other regions may also reduce production due to losses. At the same time, bad weather also put pressure on demand and market sentiment.
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