Latest Update in the SMM Finished Steel Market

This week, ferrous metals were in the doldrums. Last Sunday afternoon, a converter explosion occurred unexpectedly at a steel mill in Inner Mongolia, prompting the blast furnace at the facility to be shut down for maintenance. The incident also heightened market expectations for stricter safety measures in steel production, leading to a slower-than-expected recovery in overall hot metal output. At the beginning of the week, iron ore led the decline in ferrous metals, with finished products following suit. In the latter part of the week, the decline in hot metal output was milder than anticipated, and coupled with Trump’s shift in stance—abandoning tariff threats—market sentiment improved, resulting in a mild rebound in futures from lower levels. In the spot market, weaker futures dampened speculative sentiment, with restocking primarily driven by rigid demand at low prices. Some spot cargoes were sold at discounted prices, and construction material demand faced additional pressure due to weather conditions.

Last week coincided with the extended domestic Double Festival holiday. During the holiday, except for coke's first-round price increase being implemented on October 1, spot markets for most other ferrous metals series remained stable, with most markets closed for the holiday. Amid sluggish market demand, post-holiday inventories of the five major steel products accumulated significantly on a weekly basis, with the accumulation rate far exceeding that of the same period last year. On the first working day after the holiday, although futures rebounded, end-user restocking demand fell short of expectations under high inventory pressure. On the macro front, the EU formally announced the strictest-ever steel import ban on October 7, reducing the duty-free import quota to 18.3 million mt per year, down 47% from 2024, raising the tariff on excess portions from 25% to 50%, and adding new origin traceability requirements. The US also announced that starting November 1, it will impose a 25% tariff on imported medium and heavy-duty trucks...