Experts say the city - July 7

My Steel: In terms of supply, the total supply of major steel varieties last Friday was 8.8516 million tons, a week-on-week increase of 0.0417 million tons, or 0.5%. Steel production has rebounded this period, with a significant increase in the output of construction materials; last Friday, the total inventory of major steel varieties was 13.3993 million tons, a week-on-week decrease of 0.01 million tons, basically remaining flat compared to last week. However, the inventory changes of construction materials and plates have diverged, with construction materials continuing to destock and plates continuing to accumulate; in terms of consumption, the weekly consumption of major varieties last Friday was 8.8526 million tons, with construction materials consumption increasing by 1.4% week-on-week and plate consumption increasing by 0.2%. Last Friday, the consumption changes of construction materials and plates among the major varieties remained consistent. On the supply side, although the demand resilience during the current steel off-season is relatively strong, there is an expectation of further contraction in steel mill profits, and there is still room for a decline in production. Regarding rebar, the production lines that underwent previous maintenance have basically resumed production, with some steel mills undergoing phased summer maintenance. It is estimated that supply will decline slowly; in terms of inventory, rebar continues to destock during the off-season, and the accumulation of hot-rolled coils is also not large, and the overall inventory pressure is manageable; in terms of demand, steel demand maintains resilience, but as the off-season deepens, the high temperatures and rainfall this week will continue to suppress demand. It is expected that the steel supply and demand fundamentals this week will still have a weakening expectation.

Steel Home: Last week, the price increase in the domestic steel market was mainly driven by the spirit of the Central Financial Committee meeting. Whether steel prices can continue to rise in the future mainly depends on the restoration of market confidence. The current market is basically in a weak balance situation. First, downstream demand is in the traditional off-season, and high temperatures and heavy rains are not conducive to outdoor construction. Plates mainly face the pressure of relatively large resource supply; second, steel mills find it difficult to truly reduce production. According to data from the National Bureau of Statistics and the China Iron and Steel Association, the steel industry achieved profitability in May. Based on the current steel prices and the fluctuation range of raw materials, the profit margin is greater than that in May. Under profitable conditions, proactive production cuts are a low-probability event. It is expected that the possibility of price fluctuations and adjustments in the domestic steel market this week is relatively high. We should pay close attention to changes in steel mill production and market transaction volume.

Lange: The current domestic and international economic situation remains complex and changeable. China's macroeconomic policy counter-cyclical adjustment and market-guided demand contraction are at a critical stage of mutual contention. We must persistently and continuously increase the intensity of various policies to expand domestic demand, especially significantly strengthening the investment in government public products, expanding the scale of investment, effectively and powerfully driving a significant increase in orders from manufacturing enterprises, and driving sustained activity in manufacturing production investment. From the perspective of the black commodity futures market, the upward trend of black commodities has converged, with intraday pullbacks. In the end, the main contracts of coking coal and coke fell intraday, while rebar, hot-rolled coils, and iron ore saw slight increases. However, from a weekly perspective, among black commodities, the main rebar contract had the highest increase, at 2.74%, followed by hot-rolled coils at 2.63%, and iron ore at 2.59%. Coking coal and coke saw slight weekly increases. Specifically, for rebar, the main 10 contract closed at 3072, up 7 points for the day, up 77 points from the close of last Friday, with a weekly settlement price of 3036, up 55 points. The latest open interest was 2.238 million lots, an increase of 95,000 lots from last Friday, and the trading volume was slightly higher than last week. From the weekly price trend, it broke through and rose compared to last week, exceeding the price highs of the previous five weeks, returning to the level at the end of May, and the upward momentum has strengthened. We should pay attention to the support level of 3036 last week. Due to the rapid upward movement in the market, a normal pullback has occurred from the high of 3095. If the pullback is not large, or even does not fall below 3050, there is still an opportunity to rise. At that time, we can buy low near 3036. From the perspective of the steel spot market, on the supply side: due to the impact of the profitability of different varieties, steel mills' capacity release has continued to strengthen, and pig iron production has continued to increase slightly, while the output of different varieties has varied. On the demand side: due to the impact of the Tangshan production reduction news, the futures market has seen a significant rebound, and speculative demand has also been released, but the off-season effect still affects the release of terminal demand. On the cost side: due to the steady increase in iron ore prices, the slight fluctuation in scrap steel prices, and the stable coke prices, the support of production costs remains resilient. Therefore, the Lange Steel Research Center predicts that under the influence of the complex and changeable external environment, China's economic resilience, the continued strengthening of supply release, the release of speculative demand, and the maintenance of cost support resilience, the domestic steel market may experience a weak correction this week.

Tang Song: High temperatures continue in southern China this week, with heavy rains in some areas, and frequent rainfall in northern China. Weather factors continue to restrict outdoor construction. Affected by this, the construction progress of downstream industries such as infrastructure and real estate continues to be hindered, and the space for steel demand release remains limited. The current steel market is still in the off-season for demand, and the seasonal pressure on terminal demand still exists, with the overall market demand maintaining a weak pattern. However, with the improvement of market expectations and price corrections, speculative demand is expected to increase slightly. Some traders and end-users may replenish their inventories moderately at relatively low prices, thus supplementing demand to a certain extent. However, overall, the improvement in demand is limited and cannot provide strong support to the market. From the supply side, Tangshan's environmental protection production restrictions have begun to be implemented. From historical experience, the duration and actual implementation intensity of environmental protection production restrictions are uncertain. Overall, the impact of the previous production restrictions is expected to be relatively limited. In the case of previous excessive enthusiasm, it may be difficult to meet expectations. Some long-process blast furnaces are undergoing alternating maintenance and resumption of production, and the blast furnace operating rate is not expected to decrease significantly, and the overall supply volume remains relatively high. However, independent electric arc furnace production lines are affected by peak summer electricity consumption and production losses, and the output of rebar is likely to continue to decline, with the overall supply mainly decreasing slightly. This week, it is expected that steel supply will decrease slightly, demand will remain weak, and inventories will adjust slightly. The deadline for equivalent tariffs of 90 days on July 9 is approaching, and the United States may exert extreme pressure on some countries. Judging from the results of the trade agreement reached between the United States and Vietnam, tariffs cannot be completely canceled equally, which will increase market uncertainty to a certain extent. Unstable factors in the international trade environment still exist, which may have an impact on the export demand and market confidence of the steel market. At the same time, China will soon release financial and monetary data for June. It is expected that the growth rate of M1 in June will continue to rise on the basis of a low base, and the growth rate of M2 will maintain stable growth, reflecting further improvement in economic activity and enhanced corporate vitality. The macroeconomic environment continues to support the steel market. In addition, many industries in China are starting to reduce overcapacity, and more "anti-involution" measures are expected to be implemented. Policy support will provide long-term positive factors for the steel market. Although international tariff policies have increased market uncertainty, seasonal pressure on the demand side and the uncertainty of the intensity of production restrictions have also constrained the upward momentum of the market to a certain extent. At the same time, the rapid rise in futures prices has made the spot market reaction relatively flat, and the high valuation of futures has also put some pressure on the market, but the resilience of spot prices has significantly increased. Under the combined effect of the reduction of overcapacity in many industries in China, the expected implementation of more "anti-involution" measures, the continued improvement of macroeconomic data, the continuous increase in domestic policy support, and the expected continuation of environmental protection production restrictions until the military parade in September, the steel market will receive long-term support. Therefore, the overall market trend remains bullish. For the rebar futures, the resistance level above is around 3130. The support level below is around the previous low of 3035.

Han Weidong, Youfa Group: Macroeconomic expectations have warmed up in the past week, and the prices of ferrous metals have risen. We can view this as a valuation repair, as the previous low prices and significant discounts were in preparation for "decoupling." This rise is not significantly related to supply and demand contradictions; the market is still operating within a range. We have repeatedly emphasized that all opportunities arise from low prices, and all risks stem from high prices. When we emphasized that the risk of a decline in the latter half of this year is low, it wasn't because there were no supply and demand contradictions, but because prices were in the bottom range, and there hasn't been a significant "rise" this year. After the market rebound and valuation repair are complete, we need to look at the market fundamentals. Currently, we should cherish the opportunities provided by the market, secure our profits, and maintain a positive and stable operational approach.