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Morning Ferrous Markets

By: Spencer Johnson, Risk Management Consultant

Morning Ferrous Markets

 

Recent fluctuations in the ferrous markets have been influenced by a mix of geopolitical and economic factors, leading to pronounced volatility. Concerns over China's property market and U.S. tariffs on Chinese steel have added pressure on iron ore and steel futures. Additionally, stockpiling in Chinese ports during a traditionally strong demand season signals a weakening demand, impacting global price trends. These developments, alongside ongoing adjustments in global trade policies and market uncertainties in major steel-producing nations, have tightened physical markets and shaped near-term expectations in the ferrous metals sector.

 

Macroeconomic Data

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US HRC Steel Futures

The HRC Steel Futures market is characterized by near-term price declines with May and June 2024 futures closing lower than their opening prices. However, from January 2025 onwards, the futures exhibit a robust and uniform increase of +11.00 per month, stabilizing at 864.00 from December 2025 onwards. This pattern reflects a market adjustment in the short term but a bullish outlook in the long term, likely driven by expectations of economic recovery, inflation, or rising demand in the steel industry. The consistent long-term price indicates a strong market sentiment projecting increased steel prices, suggesting a strategic opportunity for long-term investments in HRC Steel Futures.

HRC Front Month 3 Day Trend

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HRC Front Month 6 Month Price Trend

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StoneX & Bloomberg

Chinese Iron Ore Futures

Property sector woes in China likely have more room for declines, with residential real estate applications and loans at multi-year lows. Consumer's reluctance to buy new property has led to muted domestic demand for both steel and iron ore and, while the SRB has reaffirmed their schedule for supportive bond issuances, and similar fiscal measures, Chinese Iron ore port inventories remain at their highest level since May 2022. Despite inventories reaching stability at 145Mt, late 4Q24 - early 1Q25 iron ore futures are up 2.5% across the board, the largest growth across all of StoneX's ferrous product offerings. It's an interesting development, since it rests during a cyclical since driven by ongoing recovery signs in China's economy and government actions aimed at resolving the housing crisis. Consistent Chinese factory activity growth and strategic economic stimuli has contributed to optimistic market forecasts.

SGX Iron Ore CFR China (62%) Futures

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StoneX & Bloomberg

Turkish Steel Scrap

The Turkish steel scrap market is currently experiencing a period of stability, with prices holding steady; CRU’s assessment places HMS1/2 80:20 at $384 per metric ton and shredded scrap at $408 per metric ton. This follows an early April recovery from losses incurred in March, leading to a phase of relative stability in recent weeks. However, the market faces ongoing challenges such as high Asian stock levels, unstable Chinese export markets, and low local demand, which continue to suppress sentiment and buying interest. Import activity has slowed as Turkish mills have completed their recent restocking and are observing a lull in purchasing amid these subdued market conditions. The combination of stable prices and reduced activity suggests that significant price movements are unlikely in the near term unless influenced by shifts in domestic consumption or global market dynamics.

Turkish Scrap 1st Month Futures

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StoneX & Bloomberg

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StoneX & Bloomberg

  • Base Metals

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