Monthly report: The pig iron market will fluctuate and consolidate in December
Hit：152025-01-07 14:37:20
Overview: Reviewing the national pig iron market situation in November, the overall trend shows a wide upward adjustment. The cost of raw materials has risen within the month, and the profit of pig iron has continued to narrow. The losses of pig iron enterprises have continued to expand, and the price of pig iron has passively increased. However, downstream casting enterprises have limited acceptance of high priced resources and are generally cautious in purchasing goods. At present, low demand remains the main factor suppressing the upward trend of pig iron prices. Therefore, regarding whether pig iron prices can continue to rise in the next December, the author will provide a brief analysis from the following aspects.
1、 The price of pig iron in the market increased significantly in November, and the focus of transactions continued to shift upwards
In November, the overall price of pig iron in China increased significantly. During the month, iron ore fluctuated strongly, coke prices rose twice, and raw material costs continued to increase, supporting the price of pig iron. The price of pig iron passively rose, but the increase in pig iron prices was difficult to match the increase in raw material costs, and the losses of various production enterprises continued to expand. However, downstream casting enterprises have limited acceptance of high priced resources, and the cost-effectiveness of scrap steel is still better than that of pig iron. Downstream enterprises have a greater demand for scrap than pig iron, and the overall market transaction is not ideal. As of November 30th, the monthly increase of steelmaking pig iron L8-L10 in Linyi was 140 yuan/ton, reporting 3390 yuan/ton, and in Linfen it was 110 yuan/ton, reporting 3410 yuan/ton; Casting pig iron Z18 in Linyi increased by 140 yuan/ton month on month, reporting 3590 yuan/ton, and in Linfen increased by 70 yuan/ton month on month, reporting 3610 yuan/ton; Ductile iron Q10 in Linyi has increased by 170 yuan/ton month on month to 3680 yuan/ton, while in Linfen it has increased by 100 yuan/ton month on month to 3580 yuan/ton.
2、 The utilization rate of blast furnace capacity in domestic pig iron enterprises has slightly increased
During the month, pig iron enterprises experienced both shutdown and resumption of blast furnace production, resulting in a slight increase in capacity utilization rate. Affected by the rise in raw material prices, the price of pig iron passively followed suit, and some pig iron enterprises resumed production as planned. However, due to the fact that the increase in pig iron prices was not as significant as the increase in raw material costs, the resumption plan of some suspended production enterprises was temporarily postponed. However, from the perspective of capacity utilization and weekly output, the overall trend still shows a slight increase. As of November 30th, 30 out of 64 blast furnaces in the national sample pig iron enterprises have been shut down for maintenance, with a total capacity of 7729m ³. The weekly capacity utilization rate is 57.47%, a decrease of 0.45% compared to last week and an increase of 2.64% compared to the previous month. Factory warehouse
3、 Global pig iron production fluctuates with each other
According to new statistics released by the World Steel Association, the total global production of blast furnace pig iron in October 2023 decreased slightly compared to September 2023, while the global production of direct reduced iron increased slightly compared to September 2023
Statistics show that in October 2023, the 40 major pig iron producing countries worldwide produced a total of 103957 tons of pig iron, a decrease of 0.32% compared to the same period last year. The global direct reduced iron production was 10743 thousand tons, an increase of 3.88% year-on-year compared to the same period last year.
There are 393600 tons in stock, with an increase of 0.1 million tons in the week on week ratio and a decrease of 65400 tons in the month on month ratio.
4、 Downstream enterprises' demand for pig iron procurement remains sluggish
In terms of steelmaking and pig iron, the purchase price of scrap steel at Shagang increased by 50 yuan/ton within the month, and some steel mills resumed the use of steelmaking and pig iron, increasing their purchasing enthusiasm. In terms of casting pig iron and ductile iron, downstream casting companies' orders have not improved, coupled with raw material costs driving up pig iron prices. Downstream companies have limited acceptance of high priced resources, and in order to achieve cost reduction goals, they have adjusted the proportion of pig iron and scrap steel usage, increasing their willingness to use scrap and continuously squeezing the demand for pig iron.
5、 Summary
In terms of coke: In December, coke enterprises have a third round of plans to increase prices. Currently, the safety situation in coal mines is severe, and as the end of the year approaches, the annual goals of coal mines are mostly achieved. The enthusiasm for increasing production is not high, and the supply of coal mines is difficult to improve; However, downstream demand remains high, rigid demand does not decrease, and coke costs are strongly supported. It is expected that steel mills will implement the third round of price increases in early December. However, considering the losses incurred by steel mills and the reality of improved inventory, coke does not have the conditions for a significant increase. Therefore, it is currently expected that there will be two rounds of price increases in December, and there will be some difficulty in implementing the fourth round of price increases.
In terms of iron ore: In December, China's iron ore supply and demand may show a situation of strong supply and weak demand. From the supply side perspective, combined with the global iron ore shipping volume and shipping schedule in the previous period, the amount of imported ore arriving at the port in December will slightly increase compared to November; On the demand side, according to preliminary market research, the suspension and resumption of production of blast furnaces in the future will result in relatively small fluctuations in the production of molten iron. However, considering that steel companies may still conduct maintenance on blast furnaces for equipment maintenance before the end of the year, coupled with the recent strong raw material prices, production pressure still exists. Therefore, it is expected that molten iron production will maintain a downward trend before the end of the year. Therefore, under the influence of the differentiation between supply and demand, it is expected that the price trend of iron ore in December will fluctuate weakly.
In terms of scrap steel: In terms of the iron scrap price difference, iron ore has shown a stronger performance this week, and the price difference between scrap steel and iron has expanded for the fourth consecutive week. Currently, the cost of scrap steel is inverted by 275 yuan/ton compared to iron ore, reaching a significant level since August 2022. The cost-effectiveness advantage of scrap steel over iron ore has further expanded. At present, the utilization rate and operating rate of electric furnace capacity are steadily increasing, and the cost-effectiveness advantage of scrap steel over molten iron is further expanding, consolidating the support of scrap steel. Therefore, it is expected that the price of scrap steel will fluctuate at a high level in the short term.
In terms of supply and demand: Due to the increase in raw material costs, the losses of various pig iron enterprises have expanded, and the resumption plans of some suspended production enterprises have been postponed again. In addition, as the demand for replenishing inventory from merchants weakens, pig iron enterprises are not shipping quickly, and there may be expectations of accumulated inventory in the factory, leading to an overall increase in supply pressure. It is understood that downstream casting enterprises often suspend production and vacation in advance, which may tighten market demand. Due to the high price of pig iron, downstream enterprises and traders often adopt cautious replenishment operations and still mainly purchase in small quantities according to demand, making it difficult for market trading sentiment to recover.
In summary, the raw material market is fluctuating at a high level, and there is still support for the bottom of pig iron prices. However, demand is sluggish, and the market's strong supply and weak demand pattern is difficult to improve. Many businesses are adopting a wait-and-see attitude. Therefore, in the game of high cost and low demand, it is expected that the price of pig iron in December may maintain a volatile adjustment.
