Experts say the market - January 20

My Steel:In terms of supply, last Friday, the supply of the five major steel varieties was 8.2406 million tons, an increase of 156,400 tons compared to the previous week, with a growth rate of 1.9%. Among the production of the five major steel varieties last Friday, except for rebar and medium-thick plates, the production of other varieties decreased. The core driver was the recovery of steel mills' production lines after maintenance and the resumption of production in some steel mills. In terms of inventory, the total inventory of the five major steel varieties last Friday was 11.515 million tons, an increase of 191,500 tons compared to the previous week, with a growth rate of 1.5%. The total inventory of major varieties last Friday, except for wire rods, increased: factory inventory increased week-on-week, mainly driven by cold-rolled contributions. Social inventory increased week-on-week, mainly driven by rebar contributions. In terms of consumption, the weekly consumption of the five major varieties last Friday was 8.0491 million tons, an increase of 1.7% compared to the previous week; among them, the consumption of construction materials increased by 1.1% and the consumption of plates increased by 1.9%. The apparent consumption of the five major varieties last Friday showed a dual increase in construction materials and plates.Last Friday, the inventory of the five major steel varieties continued to increase by 191,500 tons to 11.515 million tons, and the steel production rebounded by 1.9% week-on-week, an increase of 156,400 tons compared to the previous week. The apparent demand for the five major steel varieties rebounded to 8.0491 million tons. Specifically, the apparent demand for rebar and cold-rolled products decreased, while the apparent demand for hot-rolled products increased to a one-month high, and the apparent demand for wire rods slightly rebounded week-on-week. The fundamentals of steel showed contradictory performance, and with a certain rebound in steel prices last week, the profits of steel mills partially recovered. The competition between coking coal and steel may further intensify, while the raw materials continue to weaken significantly, with some raw materials stabilizing. Overall, the market shows a strong oscillating trend, and attention should still be paid to the disturbances in domestic and international macro situations.

Steel Home:Last week, the domestic steel market stopped falling and rebounded, largely due to the improvement in market sentiment. First, the winter storage policy of steel mills has been determined, and it is not important whether merchants engage in winter storage; second, current steel prices are generally at the bottom, with steel mills basically between breakeven and loss; third, the continuous low inventory has weakened the bearish sentiment in the market, and the futures market has stabilized the spot market, with rebar and hot-rolled products stopping their decline and rebounding. Driven by favorable policies, the economic growth rate in the fourth quarter is rebounding. According to data released by the National Bureau of Statistics, China's GDP in the fourth quarter increased by 5.4% year-on-year, an increase of 0.8 percentage points compared to the third quarter, achieving the annual target of 5%. Consumption and industrial production have rebounded significantly, driven by the replacement of old with new, with automobile production hitting a record high for two consecutive months and home appliance sales increasing by over 20% year-on-year for four consecutive months. In December, industrial added value increased by 6.2% year-on-year, an increase of 0.8 percentage points compared to November. As the Spring Festival approaches, downstream construction sites and some enterprises are gradually starting their holidays, and the market will gradually enter a state of rest. It is expected that this week, domestic steel market prices will stabilize with a slight increase, gradually stabilizing in the second half of the week. Key attention should be paid to the progress of inventory accumulation before and after the Spring Festival, the intensity of steel mill production recovery, and the situation of project initiation after the holiday.

Langge:In 2024, China's economy overcame various difficulties and challenges brought by a complex internal and external environment, successfully achieving the main expected goals and tasks, promoting effective qualitative improvement and reasonable quantitative growth of the economy, with high-quality development being substantial and the achievements being hard-won. Of course, we must also be clear that the adverse effects brought by the external environment are deepening, domestic demand is insufficient, some enterprises are facing operational difficulties, and the pressure on employment and income for the public is significant, with many risks and hidden dangers still present. Promoting economic recovery and improvement will require hard work. In 2025, we must follow the decision-making and deployment of the Central Economic Work Conference, face difficulties squarely, strengthen confidence, prioritize action, and transform favorable factors from all aspects into tangible results in development, continuously promoting the sustained improvement of the economy.From the perspective of the black series futures market, steel prices have achieved a strong rise with five consecutive days of gains, becoming increasingly strong. Today, the main contracts closed with gains exceeding 1.5%, and coking coal rose over 2%. Looking at the main rebar contract for May, it closed at 3372, with a daily increase of 64 points and a weekly increase of 170 points, with a weekly settlement of 3289, up 59 points. In terms of position changes, the first three days were basically a reduction in positions while rising, and the last two days saw an increase in positions while rising, with short and long positions switching roles, and the long positions gradually increasing their investment and attacking. From a weekly perspective, the weekly K-line closed with a large bullish line, breaking through the high points of the previous three weeks and continuing to rise. The upward momentum remains strong, but due to the continuous rise, a rhythm adjustment is needed, and this week may see some oscillation, with a reference range of 3280-3440. From the perspective of the steel spot market, on the supply side: due to the impact of the profitability of various products, the intensity of capacity release has begun to weaken, and the output of molten iron has decreased, while the output of various products has shown mixed results. On the demand side: with the impact of seasonal weather and the Spring Festival holiday, terminal demand is gradually shrinking, but the gradual initiation of traditional winter storage operations has led to an increase in market transactions. On the cost side: due to a slight increase in iron ore prices, scrap steel prices have risen, and coke prices have remained stable, which has once again strengthened the support for production costs. Therefore, the Langge Steel Research Center predicts that (from January 20 to January 24, 2025), under the influence of sustained economic improvement, weakened steel mill supply, gradual implementation of winter storage operations, and enhanced cost support, the domestic steel market will experience oscillating increases.

Tang Song:This week coincides with the Lunar New Year, and terminal and trading enterprises are gradually going on holiday, construction project operations are stagnating, and many construction companies are entering a holiday state. The demand for construction steel has entered a significant reduction phase, while processing and manufacturing enterprises are also gradually going on holiday and stopping work, leading to a rapid decline in demand for plate and strip products. The trading market is entering a semi-holiday state, with trading demand basically stagnant and terminal replenishment basically completed, resulting in a reduction in procurement scale and a significant weakness in terminal demand. The rapid weakening of market demand has become a reality, and the overall demand for steel has noticeably weakened. On the supply side, as the Spring Festival approaches, the operating rate of long-process production lines will remain stable; in most regions, independent electric furnace production lines are concentrated in shutdowns and holidays, and the operating rate of short-process production lines may decline significantly; the output of rolled products remains stable, while the output of rebar has decreased significantly. The supply of steel resources continues to decrease, with winter storage contract resources and resources from the north to the south continuing to increase. The market is generally in a clear state of "double reduction" in supply and demand, with the weakening of demand continuing to accelerate. The social inventory of steel has entered a rapid rising phase.The increase in U.S. consumer prices in December was lower than expected, and the inflation logic driving the rise in bulk commodities has slowed down. Although Trump's inauguration on January 20 is expected to reinforce the U.S. inflation logic again, the market is expected to have already priced in the inflation logic in advance, and the market's upward drive from inflation will weaken in the future. Domestically, as macro indicators are released, macro news may significantly decrease this week. After the small year, the trading market is gradually entering a semi-holiday state, and the winter storage operations for steel before the New Year have ended. Steel companies have completed replenishment of raw materials before the holiday, and as the concentrated replenishment of upstream and downstream ends, the overall black futures and spot market's upward drive has significantly weakened, and enthusiasm for black commodities has cooled. It is expected that the futures and spot market may experience oscillation and adjustment. The futures rebar contract should pay attention to the pressure at 3425, with risk prevention above 3400, and support at 3280 below.

Youfa Group Han Weidong:With the stabilization and improvement of market sentiment, the prices of steel and raw materials have rebounded from the low fluctuation area, and the output of steel mills has also increased month-on-month, but it is not enough to change the market supply and demand pattern. Last year's crude steel production was 1.005 billion tons, maintaining above 1 billion tons. The demand has exceeded expectations for three consecutive months, and there is hope that the growth momentum can continue after the Spring Festival, which needs to be closely monitored! The increase in production after the Spring Festival has been a normal action for the past few decades. Last year's first quarter saw a demand drop of over 15%, but it did not prevent steel mills from reaching an average daily output of 3 million tons in the second quarter. It is uncertain whether lessons will be learned this year, so the focus should be on the recovery of production after the holiday. The prices before and after the holiday are also a key focus. I often say that all risks come from high prices, and all opportunities come from low prices. When prices reach the "high point" area given by many institutions, caution is required. If prices fall to the low price area, do not scare yourself.