Domestic Pig Iron Market Update: Strong but Cautious

Market Trend

The domestic pig iron market is currently trading in a strong but cautious range. Overall, market sentiment remains moderate, with buyers and sellers showing restrained activity, providing slight price support.

Macro Factors

Recently, three policy banks—the China Development Bank, Agricultural Development Bank, and Export-Import Bank—announced progress on new policy-based financial instruments. Nearly 300 billion RMB has been injected, potentially driving total project investment exceeding 4 trillion RMB.
Looking ahead, the next five-year plan ("15th Five-Year Plan") is expected to continue structural economic transformation. Following the initial shift from real estate to manufacturing during the "14th Five-Year Plan," the new phase aims to upgrade the industrial system from traditional manufacturing to technology-driven innovation.

Futures Market

As of the close, main contracts in the ferrous metals sector moved upward:

• Iron ore +5 → 774 RMB/ton

• Coke +18 → 1709.5 RMB/ton

• Coking coal +17 → 1209.5 RMB/ton

• Rebar +18 → 3068 RMB/ton

• Hot-rolled coil +26 → 3247 RMB/ton

Cost Analysis

Rising coal prices continue to push coke costs higher. High steel mill operating rates sustain rigid coke replenishment, keeping inventories low. The combined effect of strong costs and stable demand reinforces expectations of a second round of coke price increases. Iron ore prices rose slightly, supporting pig iron production costs.

Supply and Demand

• Supply: Low inventories at pig iron mills, with limited willingness to sell at lower prices.

• Demand: Downstream foundries face order constraints and are reluctant to purchase high-priced material, primarily replenishing only as needed. Overall trading activity remains moderate, maintaining a short-term market balance.

Conclusion

Domestic pig iron prices are expected to remain strong but cautious in the short term.