The domestic pig iron market rose in a narrow range in February.
In January, the national pig iron market price showed a stable trend. In January, the coke dropped by 200-220 yuan for two consecutive rounds, and the price remained stable after the two rounds of drop. The price of iron ore is slightly higher due to the strong disk operation, and the cost of raw materials still has some support for the price of pig iron. After the price of superimposed scrap steel rises, it temporarily runs at a high level, and steel mills are still enthusiastic about purchasing pig iron for steelmaking. However, with the approach of the Spring Festival holiday, the number of blast furnace shutdowns in pig iron enterprises has gradually increased, and downstream foundry enterprises have gradually started the shutdown holiday mode. The situation of weak supply and demand of pig iron is difficult to change in the short term. The overall trading atmosphere in the market is deserted, with only a small increase in the price of scarce specifications in some areas, and the overall pig iron market is stable. After the holiday, pig iron enterprises and downstream foundry enterprises will gradually resume work, and the price of pig iron will rise in a narrow range in February due to the gradual recovery of terminal demand.
The cost of pig iron is still at a high level in January and January.
In terms of coke, coke dropped to the ground for two consecutive rounds, with a cumulative drop of 200-220 yuan. The decrease in coke price led to an increase in losses of coke enterprises, an increase in production pressure of coke enterprises, independent control of production, and a decline in the level of start-up. The profits of coke enterprises have shrunk again, and they are mainly operating at a stable price. The spot transaction of port coke is weak, the inventory has declined, and the traders' willingness to gather in Hong Kong is weak. After the lifting and lowering has been fully implemented, the price of coke has temporarily stabilized.
Ore: The iron ore market has cooled down due to the influence of the NDRC's document on strengthening the supervision of iron ore prices. In January, the year-end shipping impulse of overseas mines brought about an increase in iron ore imports, but the year-end overhaul output of domestic mines declined, so it was difficult to increase molten iron in the case of loss of steel mills, and the overall supply and demand gap may have expanded. This month, the iron ore disk surface became stronger and the price rose slightly, which strongly supported the price of pig iron at the raw material cost end.
Second, domestic pig iron production decreased year on year.
Statistics from the National Bureau of Statistics show that in December 2022, China's pig iron output was 69 million tons, down 4.6% year-on-year; In December 2022, the average daily output of pig iron was 2.226 million tons, down 1.77% from the previous month. From January to December 2022, China's pig iron output was 863.83 million tons, down 0.8% year-on-year.
Prospect of pig iron market in March and February
1. Cost.
Iron ore: At present, the fundamentals of iron ore are still relatively strong, and the price of iron ore is still at a high level. After the holiday, the iron ore inventory of steel mills is generally low, and the demand for replenishment may be ushered in again after the holiday. In addition, there are strong macro and market expectations, iron ore may be stable in the short term, but there are risk factors such as uncertainty in the recovery of downstream demand and rapid increase in steel inventory. The key point is still to pay attention to the changes in terminal demand.
Coke: At present, coke enterprises are still in a state of loss, and their enthusiasm for production is not high, and individual enterprises have started to fall back. The steel mill started to lift, but the game of coke and steel was fierce, and there was resistance when it landed. The contradiction between supply and demand of coke has eased, demand has improved, and supply has tightened. After the holiday, the steel market has made a good start, the enthusiasm of steel mills has been supported, and the coke price may stop falling and stabilize.
2. Supply and demand
Pig iron enterprises that stopped production before the festival began to resume production one after another, and the supply of pig iron will increase, and the phenomenon of accumulated stocks will appear before the festival, and the supply of pig iron will be under certain pressure. The downstream foundry enterprises will also gradually resume work, and the demand for pig iron will gradually pick up, and the supply and demand of pig iron will double. Coupled with the gradual recovery of terminal demand, the overall market expectation is improving, but the release speed and height of terminal demand still need to be considered.
On the whole, it is expected that the domestic pig iron market price may show a narrow upward trend in February.