China's Pig Iron Market Holds Steady Amid Mixed Macro Signals and Firm Cost Support

Today, the domestic pig iron market operated steadily.

Macro Perspective: Data from the National Bureau of Statistics indicates that from January to July, the value-added output of industrial enterprises above the designated size grew 6.3% year-on-year, with the growth rate edging down 0.1 percentage points from January-June. Fixed asset investment increased 1.6% year-on-year, with the growth rate declining 1.2 percentage points. Retail sales of consumer goods rose 4.8% year-on-year, with the growth rate dipping 0.2 percentage points.

From January to July, China's crude steel output reached 594.47 million tons, down 3.1% year-on-year; pig iron output stood at 505.83 million tons, decreasing 1.3% year-on-year; while steel output totaled 860.47 million tons, up 5.1% year-on-year.

Additionally, U.S. Department of Labor data showed the Producer Price Index (PPI) climbed 0.9% month-on-month in July, marking the steepest single-month rise in three years and significantly surpassing market expectations of 0.2%. The year-on-year increase reached 3.3%, also exceeding the projected 2.5%.

Futures Market: As of market close, the main black commodity contracts showed mixed adjustments. Iron ore dropped 8.5 points to 776; coke gained 8.5 points to 1,729.5; coking coal rose 4 points to 1,230; rebar fell 13 points to 3,188; and hot-rolled coil advanced 7 points to 3,439.

Cost Perspective: Following the full implementation of the sixth round of coke price increases, the market stabilized temporarily. Iron ore prices fluctuated within a narrow range, with raw material costs continuing to provide firm support.

Supply and Demand: With steel futures remaining weak, traders maintained cautious operations. Some merchants offered modest discounts to improve cash flow. Iron mills primarily focused on executing existing orders while keeping inventories at relatively low levels. Downstream foundries continued procurement based on essential demand, with no substantial improvement anticipated in the near term. However, the combination of lean inventories and strong cost fundamentals fostered widespread wait-and-see sentiment, leaving mills with limited flexibility for price concessions.

In summary, the pig iron market is expected to remain stable with cautious sentiment in the coming week.