Experts say the city - May 12

My Steel: In terms of supply, the supply of the five major steel varieties last Friday was 8.7417 million tons, a week-on-week decrease of 95,200 tons, or 1.1%. The reduction in the five major steel varieties this period mainly reflected in the rebar of construction materials, mainly due to the decrease in production caused by the transfer of iron and steel from individual steel mills and production reduction due to maintenance; last week, the total inventory of the five major steel varieties was 14.7607 million tons, a week-on-week increase of 289,700 tons, or 2.0%. Last week, the total inventory of the five major varieties turned from a decrease to an increase, mainly due to the impact of the May Day holiday, which led to a temporary weakening of demand and an increase in inventory. In addition, the inventory pressure last week mainly reflected in the factory inventory, while the social inventory pressure was relatively small; in terms of consumption, the weekly apparent consumption of the five major varieties last week was 8.4637 million tons (the social inventory cycle in the previous period was 6 days, and the social inventory cycle in this period was 8 days, so the apparent demand and change in this period are the converted values after these two social inventory cycles are converted to 7 days), a decrease of 12.7% compared to the previous week: among them, the consumption of construction materials decreased by 23.8%, and the consumption of plates decreased by 5.4%. Last week, the decrease in the consumption of construction materials among the five major steel varieties was higher than that of plates, mainly because the demand from construction sites was more significantly affected by the holidays, and the rush work situation was not optimistic. Overall, the steel market last week showed a situation of simultaneous decline in supply and demand, with a temporary increase in inventory, and the pressure on fundamentals has emerged. In terms of supply, the current spot profit of steel is still considerable, coupled with the retreat of holiday benefits, and as the post-holiday downstream low-price replenishment demand is still expected to be released temporarily, therefore, production is unlikely to decline significantly in the short term. According to the current steel mill maintenance expectations, the output of long products will rebound this week, while the output of plates may decline slightly; in terms of demand, with the increase in rainy weather in the south recently, although there is some replenishment demand downstream after the May Day holiday, the impact of weather may lead to weak rebound momentum of demand. In terms of inventory, although steel inventory showed an increase in inventory last week, it has not yet entered the inventory accumulation cycle, so downstream inventory is expected to turn from increase to decrease. In the short term, the contradiction of steel fundamentals is not significant, and as the inventory reduction contradiction may ease this week, it may provide some support to steel spot prices.

Steel Home: Last week, domestic steel market prices mainly fluctuated and adjusted. From the perspective of short-term influencing factors, after the Sino-US tariff war temporarily came to an end, the market will gradually return to fundamentals. In terms of macroeconomic policies, a series of policy measures were announced at the press conference of the People's Bank of China, the Financial Regulatory Bureau, and the China Securities Regulatory Commission on the 7th, including lowering the reserve requirement ratio, lowering interest rates, and lowering the reserve requirement ratio, which strengthened the policy support for economic growth; on the supply side, the crude steel output of key steel enterprises in late April fell slightly month-on-month, but the blast furnace and electric furnace operating rates rebounded slightly after the holiday, and steel mills were highly motivated to produce. Against the backdrop of steel mills making profits, the possibility of short-term crude steel reduction is unlikely; on the export side, foreign trade exports continued to grow rapidly in April, especially steel exports exceeding 10 million tons for two consecutive months. In addition to grabbing exports, strong overseas demand is also a major reason, but due to the impact of the trade environment, the probability of export decline in the later period is relatively large; on the demand side, affected by the Sino-US tariff war, the manufacturing PMI and construction PMI in April both fell, and the total investment of new investment projects surveyed by Steel Home decreased year-on-year, and the momentum of infrastructure investment demand was insufficient. It is expected that domestic steel market prices will continue to fall slightly this week.

Lange: Currently, the global economy is full of uncertainties. Economic fragmentation and trade tensions are intensifying, disrupting global industrial and supply chains, triggering turmoil in international financial markets, weakening the momentum of global economic growth, and the task of domestic structural transformation remains arduous. The growth momentum of domestic effective demand is insufficient, and the foundation for the continued recovery and improvement of the economy still needs to be consolidated; we must implement a moderately loose monetary policy, make good use of existing policies, and vigorously implement incremental policies to fully release policy effects; we must strengthen coordination and linkage, and the entire system must work closely together to continuously consolidate the momentum of economic recovery and improvement, and promote high-quality economic development. From the perspective of the black series futures market, varieties such as rebar and hot-rolled coils have returned to last year's low levels; the main rebar closed at 3022, down 50 points daily and 74 points weekly, with a weekly settlement price of 3073, down 25 points. The latest position is 2.344 million lots, an increase of 432,000 lots compared to the closing price before the holiday. A large amount of funds entered the market after the holiday, especially yesterday's increase of 260,000 lots, setting a record for the largest single-day increase in this contract, with a strong short position. This week's reference operating range is 2950-3090. From the perspective of the steel spot market, on the supply side: due to the "profit effect," the intensity of steel mill capacity release has slightly increased, and the output of iron and steel has slightly increased, while the output of varieties has varied. On the demand side: due to the impact of seasonal weather, the market transactions of various varieties have varied. On the cost side: due to the steady decline in iron ore prices, the steady decline in scrap steel prices, and the stable price of coke, the support of production costs has weakened again. Therefore, Lange Steel Research Center predicts that under the influence of the suspense of Sino-US contacts, the implementation of reserve requirement ratio cuts and interest rate cuts, the increase in supply release, the uneven performance of transactions, and the weakening of costs again, the domestic steel market this week (2025.5.12-5.16) may weaken and decline.

Tang Song: This week, as the impact of the holiday ends, the futures and spot markets return to normal trading status, and end users complete replenishment operations, the demand for domestic strip steel can be significantly restored, and steel exports remain at a high level. In addition, there are still large-scale heavy rains in the north and south, and outdoor construction may be affected. The demand for rebar has entered the peak period, and it is difficult for the demand to increase significantly again. The overall rigid demand for steel during the week may return to the normal level before the holiday, but the characteristics of the approaching off-season may be shown. From the supply side, the operating rate of long-process blast furnaces is stable at a high level, and the output of major products such as coils and strips is mainly stable; the operating rate of independent electric furnace production lines and the output of rebar may increase. Steel inventories have turned from rising to falling compared to last week, and the extent of inventory reduction for major varieties varies. In some regions, the inventory of coil and strip varieties may have increased compared to before the May 1st holiday, and there is currently no obvious contradiction between supply and demand. Entering mid-May, the impact of US tariff policies on the black market may continue, and the actual impact on steel exports may gradually be reflected. At the same time, with the arrival of the rainy season, the actual demand for domestic construction steel has gradually entered a weakening period, and the expectation of peak demand has increased. The cautious and worried mood of the entire market continues, and market confidence is difficult to be significantly boosted, and the downward pressure on steel futures and spot prices is increasing. Considering the weekend Sino-US talks, market expectations are very low, and it is difficult for negative news to further intensify. From a seasonal perspective, steel inventories are still in the destocking cycle. According to seasonal performance, it is expected that a temporary increase in inventory may not occur until at least mid-June. At present, the fundamentals cannot determine that contradictions have begun to accumulate. From a technical perspective, there is a bottom divergence (prices hit a new low, and MACD did not hit a new low), and there is a possibility of technical rebound. Based on the above factors, it is expected that the decline in the iron ore futures price will be limited, and in the short term, the probability of adjustment around the 3000-3100 range is relatively large.

Han Weidong, Youfa Group: May's demand was clearly lower than expected, ending the six-month period of exceeding expectations! Current production is too high, and this surplus will become apparent as demand weakens! If administrative production restrictions are implemented late, price reductions due to oversupply will lead to steel mills reducing production due to losses. Steel mills' current average profit is less than 100 yuan, and the downward space is foreseeable and not terrible, because prices will recover after production cuts. This year's administrative production restrictions are certain, but the timing and intensity are not very certain. When production restrictions are implemented, the market will achieve true balance. The Chinese steel industry is the most competitive in the world. As long as we don't engage in internal competition, no one can defeat us. The method is simple: we only need to adjust production based on sales and efficiency. It's not unsolvable; it's just a matter of how we choose in the end. Currently, normal operations are fine. If prices fall, they will rebound. We only need to maintain current profitability during the price decline and not worry about the gains and losses in inventory. If production restrictions cause prices to rise, the profit from inventory liquidation will be realized, because ultimately, prices will still fall due to oversupply.