Experts say the city - July 14

My Steel: In terms of supply, the supply of major steel varieties last Friday was 872,720 tons, a week-on-week decrease of 124,400 tons, or 1.4%. The output of major steel varieties last Friday increased week-on-week except for medium and thick plates. The core driver is that some steel mills have stopped production for maintenance and the types of iron produced by steel mills have shifted. In terms of inventory, the total inventory of major steel varieties last Friday was 13.3958 million tons, a week-on-week decrease of 0.035 million tons, or 0.03%. The total inventory of the five major varieties last week decreased week-on-week: factory inventory increased week-on-week, mainly due to medium and thick plates. Social inventory decreased week-on-week, mainly due to rebar. In terms of consumption, the weekly consumption of the five major varieties last week was 8.7307 million tons, down 1.4%; among them, the consumption of construction materials decreased by 2% week-on-week, and the consumption of plates increased by 1.8% week-on-week. Last week, the apparent consumption of the five major varieties showed a decrease in construction materials and an increase in plates, reflecting the seasonal impact of the off-season. In terms of supply, due to the recent increase in steel mill maintenance plans, the output of pig iron has fallen, and the output of finished products may follow suit, but due to the current acceptable profit situation of steel mills, the speed of output decline may be slow. In terms of demand, the speed of steel inventory accumulation in the off-season is slower than in previous years, the inventory pressure of steel mills is acceptable, and the overall supply-demand contradiction is limited. In terms of cost, steel mills are more active in replenishing coking coal raw materials, and the current market expects coking coal to start the first round of price increases, and there is support for steel costs. Market sentiment has been boosted by news such as "anti-involution," and the overall sentiment is positive. Overall, the contradiction in the fundamentals of steel is not prominent, and driven by cost support and market sentiment, it is expected that steel prices will mainly fluctuate and strengthen in the short term.

Steel Home: Encouraged by the "anti-involution" message from the Central Financial Committee, the improvement in market sentiment is the main factor behind the recent rise in steel prices. Looking at the future market, the favorable factors are: firstly, the current steel market inventory and prices are both at low levels in recent years, steel transactions continue to improve, and replenishment demand may break the weak balance; secondly, the negative feedback between raw materials and steel prices in the short term has basically ended, global high temperatures and losses in some coal mines have driven up coal prices, the decline in domestic and imported ore is greater than the decline in pig iron, and port ore inventories are generally declining, with little short-term supply pressure, and a rise in steel costs in the future is highly probable. Thirdly, leading steel companies have raised steel sales prices. Baosteel has raised its plate sales prices after 5 months, and Ansteel, BenGang, and Shougang have also raised their prices, and the arrival cost will increase in the future. Unfavorable factors include: firstly, the profitability of steel mills has improved, and their production enthusiasm is relatively high, making it difficult to implement steel mill production restrictions; secondly, steel exports will face pressure in the future. It is expected that domestic steel prices will continue to fluctuate and rise this week. Key attention should be paid to the economic data in the first half of the year, foreign trade exports, steel mill production, and changes in market transactions.

Lange: The current international economic and trade landscape is undergoing profound changes, with unilateralism and protectionism on the rise, and various trade and investment barriers increasing. At the same time, a new round of technological revolution and industrial transformation is being deeply advanced. The Chinese economy has withstood pressure and continues to recover and improve. Judging from the performance in the first half of the year, growth is resilient, domestic demand has potential, and innovation has highlights. The Chinese economy is fully capable of withstanding any external shocks and achieving long-term steady growth. From the perspective of the black commodity futures market, the main contracts of coking coal rose by 7.41% last week, coking coal by 5.81%, iron ore by 3.8%, hot-rolled coils by 1.93%, and rebar by 1.65%. Looking at the main 10 contract of rebar, it closed at 3133, up 34 points for the day, and up 61 points from the closing price last week. The weekly settlement price was 3091, up 55 points, with the latest holdings at 2.2 million lots, a decrease of 39,000 lots from Friday last week. Prices continued to rise last week, with the increase expanding for two consecutive weeks, reaching 172 points from the low point last week to the high point last week, and more than 200 points higher than on June 6. The current market price has returned to the level of mid-April, and the rebound is strong. The current market price has already exceeded the prices of most spot markets. Pay attention to the need for rhythmic adjustments, but the rebound has not yet ended, and there is still room for another rise. Pay attention to the support level of 3100 below and the pressure level of 3150-3200 above. From the perspective of the steel spot market, on the supply side: due to the impact of the profitability of different varieties, the intensity of steel mill capacity release has changed from strong to weak, the output of pig iron has decreased, and the output of various varieties has also decreased. On the demand side: due to the impact of the production restriction news in Shanxi, the futures and spot markets have ushered in a rapid price increase, and market speculative demand has accelerated, but the off-season effect still affects terminal demand. On the cost side: due to a slight increase in iron ore prices, scrap steel prices are stable and tending to strengthen, and coking coal prices remain stable, so the support of production costs remains resilient. Therefore, the Lange Steel Research Center predicts that under the influence of profound changes in the international landscape, resilient growth of the Chinese economy, a change from strong to weak in supply release, accelerated release of speculative demand, and maintenance of cost support resilience, the domestic steel market this week may rise sharply and then fall back.

Tang Song: This week, affected by Typhoon Danas, some parts of southern China will experience significant rainfall, and some parts of northern China will also experience rainfall, while temperatures remain high. Under this background, the space for the release of steel demand remains limited. The current steel market is still in the off-season for demand, and the seasonal pressure on terminal demand still exists. However, with the gradual improvement of market expectations and the adjustment of prices, speculative demand is expected to increase slightly, which will provide some demand support for the steel market. From the supply side, Tangshan and Shanxi are implementing production control and restriction policies, but the impact of previous production restrictions is relatively limited, and it is expected that it will be difficult to reach market expectations in the short term, and the supply volume will mainly decrease slightly. In addition, 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 show narrow fluctuations. In terms of macroeconomic news, the uncertainty of Trump's tariff policy remains strong. Although the suspension period has been extended, the direction of future adjustments is unclear, and market sentiment is still affected by it. Domestic economic data for the second quarter is expected to be generally stable, but it is difficult to introduce large-scale stimulus policies, and market expectations for the macroeconomic situation remain relatively stable. In terms of supply and demand, there are expectations for supply-side regulation, and other regions may follow suit, but demand is still in the off-season and cannot be significantly improved. Inventories are expected to continue to fluctuate within a narrow range. On the cost side, the expected increase in coking coal prices will provide some support for the steel market. Market sentiment has been repaired after previous fluctuations, but the game between "weak reality" and "strong expectations" continues. In the medium to long term, under the support of supply-side regulation expectations and favorable policies such as anti-involution and urban renewal, the long-term upward trend of the steel market has not changed. It is expected that the market will mainly fluctuate and strengthen this week. For the iron ore futures, the pressure level near 3190 above can be observed. Below, pay attention to the support near the previous low of 3109/3084.

Han Weidong, Youfa Group: The Shanghai Composite Index, the Wenhua Commodity Index, and steel futures have all risen for more than ten days. This is not accidental; it's a systemic force. My view on the steel market in the second half of the year is still one of fluctuating operation! Currently, the main factors suppressing steel prices are macroeconomic deflation, industry overcapacity, and peaking demand. However, supporting the market is the fact that steel and raw material prices have bottomed out, overall inventory is at a historical low, there are limited production expectations for the industry, and export and indirect export competitiveness are strong. The low prices formed in September last year and June this year constitute very important support. The price fluctuation range this year is also much smaller than in previous years; the average monthly price fluctuation of Tangshan strip steel is within 200 yuan, and the fluctuation in June was within 40 yuan at its lowest point. This year's fluctuating market has smaller volatility, making it unsuitable for speculation but suitable for stable operations. The current international environment is arguably the worst in decades, and our economic goal is stability; the overall environment is not suitable for gambling. Fortunately, the business philosophy of steel and welded pipe companies has undergone a huge change; everyone has stopped speculating! Recently, coal prices have rebounded rapidly, but the biggest problem facing this industry in the future is the change in China's energy structure. Thermal power generation has shifted from a 1.7% increase last year to a negative growth of 1-5 months this year, compared to growth exceeding 6% before 2023. The problem with iron ore is the imminent absolute oversupply and pressure to destock; after all, no one will store goods that depreciate in the long term. The gradual increase in the amount of scrap steel in China in the future will also squeeze iron ore. China's converter steelmaking can already add 50% scrap steel. I am not pessimistic about China's steel industry; after all, it is the most competitive industry globally! It has risen for more than ten days, and there are considerable floating profits in inventory. Let's have some West Lake Longjing tea and relax.