Huatai Futures: The market is cautiously observing, with black commodities fluctuating slightly weaker.

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Source: Huatai Futures

Author: Xing Yawen

Steel: Weak cost support, steel prices fluctuate and adjust

Market Analysis

Yesterday, the main contract of rebar futures closed at 3,120 yuan/ton, and the hot-rolled coil main contract closed at 3,303 yuan/ton. In terms of spot, overall steel spot transactions yesterday were average, with prices rising then falling on the market. During the rise, low-priced transactions were better; after the decline, transactions weakened. Spot prices fluctuated with some gains and some drops, with basis remaining stable or slightly widening. Yesterday, nationwide construction material transactions totaled 106.4k tons, a month-on-month increase.

Supply and demand and logic: Currently, the contradiction between supply and demand for construction materials is insufficient, and cost support has weakened. The improvement in sheet metal production and sales is limited by high inventory levels, suppressing prices. Currently, steel prices are influenced by both macro and micro factors, following raw material fluctuations downward. Attention should be paid to developments in the Middle East, cost support, demand follow-up, and delivery negotiations.

Strategy

Unilateral: Volatility

Cross-term: None

Cross-commodity: None

Futures and spot: None

Options: None

Risks

Macroeconomic policies, demand for finished steel, steel exports, steel mill profits, and cost support.

Iron Ore: Supply and demand tensions easing, iron ore fluctuates

Market Analysis

In futures and spot markets: Yesterday, iron ore futures prices fluctuated. In spot markets, mainstream imported iron ore prices at Tangshan ports rose slightly, with traders mostly quoting according to market conditions. Steel mills mainly purchase based on demand. Total transactions at major ports nationwide reached 106.4k tons, down 12.70% month-on-month; forward spot: cumulative forward spot transactions totaled 580k tons (6 trades), down 28.83% month-on-month (including 410k tons from mines).

Supply and demand and logic: Latest global iron ore shipments have declined, pig iron production has rebounded somewhat, and inventory pressure has eased, but high inventories still restrict prices. Shipping costs have increased, supply and demand tensions have eased, and market concerns about the potential shift of distant delivery products to high-grade ores persist. Iron ore prices are relatively strong, but in the long term, if negotiations are successful later, port liquidity release will impact prices. Focus on Middle East developments and negotiation progress.

Strategy

Unilateral: Volatility

Cross-commodity: None

Cross-term: None

Futures and spot: None

Options: None

Risks

Macroeconomic policies, steel mill pig iron output, steel mill profits, overseas shipments, etc.

Coking Coal and Coke: Market returns to rationality, coking coal and coke face pressure and pull back

Market Analysis

In futures and spot markets: Yesterday, Middle East geopolitical tensions eased, crude oil and chemical products fell sharply, and coking coal futures faced downward pressure during trading, with coke coal experiencing a significant correction due to rapid previous gains. The domestic coal market continued to weaken, trading activity cooled. Yesterday, the first round of coke price increases was officially implemented, with an increase of 50-55 yuan/ton, and the market remained stable for now.

Supply and demand and logic: Coking coal: Currently, supply is relatively sufficient, coal mines continue to recover production, Mongolian coal imports are high, downstream demand remains firm, and total inventories slightly increased. The fundamentals of coking coal are not particularly tight, but as delivery month approaches, near-month coking coal faces delivery pressure. Coke: Coking enterprises are more active in production, independent coking plants maintain high operating rates, and profits remain relatively good. Supply is stable overall. The continued increase in pig iron output also supports coking coal demand, but steel mill coke inventories remain neutral, and supply and demand are generally balanced.

Strategy

Coking coal: Volatility

Coke: Volatility

Cross-commodity: None

Cross-term: None

Futures and spot: None

Options: None

Risks

Macroeconomic policies, steel mill profits, coking profit margins, coal supply, basis risk, etc.

Investment Consulting Business Qualification: Securities Permit [2011] No. 1289

Disclaimer:

This report is compiled based on information deemed reliable and publicly available, but the company makes no guarantees regarding its accuracy or completeness. The opinions, conclusions, and forecasts contained herein only reflect the views and judgments as of the date of publication. At different times, the company may issue research reports that differ from the opinions, assessments, and forecasts in this report. The company does not guarantee that the information in this report remains up-to-date. The company may modify the information without notice; investors should pay attention to relevant updates or changes. The company strives for objectivity and fairness, but the opinions, conclusions, and recommendations in this report are for reference only, and investors should not rely on this report to exercise independent judgment. The company and authors are not responsible for any consequences resulting from investors relying on or using this report. All rights to this report are owned by the company. No organization or individual may reproduce, copy, publish, quote, or redistribute in any form without written permission from the company. If quoting or publishing with permission, it must be within the permitted scope, and the source must be stated as “Huatai Futures Research Institute,” and no misinterpretation, omission, or modification of the report is allowed. The company reserves the right to pursue relevant responsibilities. All trademarks, service marks, and logos used in this report are trademarks and service marks of the company. Huatai Futures Co., Ltd. owns all rights and copyrights.

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