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Morning Ferrous Markets

By: Spencer Johnson, Risk Management Consultant

Morning Ferrous Markets


Spencer Johnson

Risk Management Consultant

+1 212-379-5492

spencer.johnson@stonex.com

Jay Horton

Base Metals Sales

+1 212-379-5553

john.horton@stonex.com


Market Overview

The global economic landscape presents mixed signals with the Eurozone's unemployment rate steady at 6.4% in May, matching forecasts, while youth unemployment stands at 14.2%. The US job market shows signs of cooling, with job openings falling to their lowest level in over three years, suggesting potential downward wage pressure. In Brazil, the unemployment rate dropped to 7.1%, the lowest since January 2015, despite a significant depreciation of the Brazilian real against the US dollar. This depreciation is partly due to President Lula's criticism of the high Selic rate and a public sector deficit. The US dollar's strength, fueled by high interest rates, affects global financial markets, including commodities. Upcoming Fed rate cuts and geopolitical tensions add to the market's uncertainty, influencing investor behavior and commodity prices.

Upcoming Data Releases

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North American (US) HRC Steel Market

In the North American market, US hot-rolled coil (HRC) prices fell by $25 per short ton to $674/st, while cold-rolled (CR) coil prices dropped by $24/st to $1,023/st. Hot-dipped galvanized (HDG) coil prices also saw a decline, decreasing by $43/st to $941/st. US scrap prices saw a slight decline of 0.99%. This decline is attributed to mills aggressively offering discounts due to high supply relative to demand. Spot activity has slowed, and although downstream product prices remain elevated, they are on a downward trend. The market conditions are likely to persist through July and potentially into August, with producers maintaining prices well above break-even points, allowing for further price reductions.

HRC Front Month 3 Day Trend

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StoneX & Bloomberg

HRC Front Month 6 Month Price Trend

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StoneX & Bloomberg

Chinese Steel & Iron Ore Markets

In Asia, the focus remains on the Chinese Manufacturing PMI and iron ore prices. The PMI remained flat at 49.5 in June, slightly below expectations, indicating ongoing contraction in manufacturing activity. Despite this, iron ore prices have risen to their highest levels in nearly two weeks, driven by improved sentiment on Chinese demand and government measures. Recent price changes show SGX iron ore futures rising by 2.9%. Vale is pricing iron ore at $94 per ton, a 15% discount to spot prices, while CSN Mineração is pricing it at $113 per ton, a 2% premium. Although there is a modest rise in industrial profits, Chinese internal and external demand struggles to absorb production overcapacity, posing challenges for recovery in producer prices.

SGX Iron Ore CFR China (62%) Futures

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StoneX & Bloomberg

European Steel and Steel Scrap Markets

The European ferrous market highlights an increase in Turkish scrap imports by 2.9% year-on-year from January to May, reaching 8.63 million mt. The US remains the leading supplier, followed by the Netherlands and the UK. Despite the increase in imports, Turkish metal producers' domestic sales prices fell by 0.81% in June. The domestic producer price index rose by 1.38% month-on-month. Additionally, Turkey has filled its EU quotas for wire rod, hollow sections, and railway steel, indicating strong export activity.

Turkish Scrap 1st Month Futures

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StoneX & Bloomberg

Current Prices

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StoneX & Bloomberg

  • Base Metals

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