On August 1st, the spot steel market saw a slight decline, while all major steel futures products saw declines. Rebar fell 1.23%, hot-rolled coil 0.58%, iron ore 0.19%, coke 3%, and coking coal 7.34%.
After a sharp correction on Thursday, steel prices narrowed today, reflecting increasing supply and demand pressures in the steel market.
However, expectations of a “counter-involution” policy remain unproven, and coupled with the continued focus on stabilizing growth, inspections of overproduction in coal mines are indeed having an impact.
National Development and Reform Commission: Promote greater participation of private enterprises in the construction of major national projects
On August 1st, Zhou Chen, Director of the National Economic Affairs Department of the National Development and Reform Commission (NDRC), stated that the NDRC will soon approve the establishment and deployment of new policy-based financial instruments.
This will encourage greater private enterprise participation in major national projects, with the nuclear power sector becoming more open to private sector participation. Furthermore, the NDRC will improve pricing mechanisms in sectors such as transportation and energy to enhance returns on investment.
National Development and Reform Commission: Govern the disorderly competition among enterprises and solidly carry out the cleanup and rectification of market access barriers
On August 1st, Wang Renfei, Director of the Comprehensive Department of Institutional Reform at the National Development and Reform Commission (NDRC), stated that, centered on the development of a unified national market, the NDRC will deepen reforms in the market-based allocation of factors, improve the unified national electricity market system, foster a national integrated data market, and coordinate the development of a unified and open transportation market.
Furthermore, the NDRC will address disorderly competition among enterprises in accordance with laws and regulations, promote capacity management in key industries, standardize bidding processes, strengthen the fairness review of winning bids, regulate local investment promotion practices, strengthen information disclosure on investment promotion, and implement a thorough cleanup and rectification campaign against market access barriers.
High-level efforts to address capacity management in key industries and address disorderly competition among enterprises will boost market confidence and benefit steel prices.
The first coal company to be fined for overproduction of 33% was shut down for rectification
According to market news, on July 26, the Qinyuan County Emergency Management Bureau imposed an administrative penalty on Shanxi Majunyu Coal and Coke Co., Ltd. An investigation revealed that the mine’s 2024 raw coal production reached 1.6 million tons, exceeding its approved production capacity by 33%.
This constitutes an administrative violation, and the penalty was therefore imposed. This is reportedly the first coal mine to be suspended for overproduction since the National Energy Administration issued Document No. 108 this month, requiring inspections of coal mines in key provinces nationwide. Furthermore, according to relevant information, inspections of overproduction coal mines in Changzhi are currently underway.
Recent statistics show that four new coal mines have been suspended due to reasons such as completing monthly production targets, exceeding gas standards, relocation, and safety inspections, totaling 6.9 million tons of approved production capacity.
Other coal mines have also reduced production to varying degrees. Overall, uncertainty remains regarding the investigation and punishment of overproduction at coal mines in major producing areas. The recovery of coal mine production before the military parade and National Day is expected to be slow.
The probability of further significant declines in the prices of both coke and molten iron after the correction is low, and steel costs remain supportive, which is positive for steel prices.
