End-of-Day Market Summary PHCC - July 17 2025

End-of-Day Market Summary – July 17, 2025

Tone: DCE Momentum Lifts Tier 2; Tier 1 Ceiling Emerges on Structural Demand Limits

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🔹 DCE Strengthens Near RMB 940 – Tier 2 Narrows Toward Tier 1

DCE Sep futures surged to ~RMB 940, buoyed by stronger-than-expected pig iron output, further reinforcing bullish sentiment.

This level now supports Tier 2 PHCC at ~$150 CFR, pushing the Tier 1–Tier 2 relativity close to 80%, a compression from previous weeks.

Traders view this narrowing as structurally healthy.

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🔹 Tier 1 PHCC Demand from China Still Elusive

Despite physical strength, China's Tier 1 seaborne PHCC demand remains muted due to structural reasons:

1. LTC Prices < Spot Prices:

Domestic end users are executing long-term contracts (LTCs) as LTC prices remain cheaper than spot.

This removes incentive to bid in the spot market.

2. CFR Index-Linked Supply with BHP:

Major mills like Baosteel and Anshan Steel have CFR index-linked PHCC contracts with BHP, making spot purchases redundant.

These buyers will passively benefit from a lower index rather than support prices in the spot market.

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🔹 Chinese Ceiling Forming at $175-180 CFR / $160-165 FOB for Tier 1

Given the lack of firm Chinese Tier 1 spot buying, market participants see $175-180 CFR (~$160-165 FOB) as a temporary Chinese ceiling.

This ceiling is unlikely to absorb current supply overhang, especially with BHP reportedly preparing another GYC parcel for sale next week, which could pressure prices further.