Experts say the city - July 21

My Steel: On the supply side, the supply of the five major steel varieties last week was 8.6819 million tons, a decrease of 45,300 tons week-on-week, down 0.5%. Last week, the output of both long and flat steel products decreased, with the largest decrease in long steel products. The main reason is that the current off-season demand is obvious, which has led to a decrease in the output of construction steel. Last week, the total inventory of the five major steel varieties was 13.3766 million tons, a decrease of 19,200 tons week-on-week, down 0.1%. Last week, the total inventory of the five major varieties maintained a destocking situation, and the overall inventory pressure was not obvious. From the perspective of inventory structure, the inventory accumulation pressure last week mainly reflected in social inventories, while factory inventories decreased significantly. This may be mainly due to the recent entry of the spread between the futures and spot prices of finished products, resulting in this structural change in inventory. On the consumption side, the weekly apparent consumption of the five major varieties last week was 8.7011 million tons, down 0.3% week-on-week: among them, construction material consumption decreased by 3.4%, and flat steel consumption increased by 1.3%. Last week, the decrease in construction material consumption among the five major steel varieties was more obvious, while the overall demand for flat steel showed resilience. Overall, last week, the supply and demand of the five major steel varieties both decreased, inventory was slightly reduced, and the fundamentals were neutral to weak. On the supply side, the current demand is significantly affected by seasonal factors. Although the profit of finished products still exists, considering that the liquidity of spot resources, especially construction steel, is suppressed, there is no expectation of a significant increase in the output of the five major steel varieties in the short term, and it may maintain a weak trend. On the demand side, the suppression of high temperatures on the demand for construction steel still exists, so the demand changes may show a fluctuating and weak structure. However, due to the support of exports, the resilience of manufacturing demand still exists. On the inventory side, it is obvious that the current inventory has entered the inventory accumulation cycle, but the short-term inventory accumulation pressure may be limited, and the fundamentals do not have a strong driving force for prices for the time being. Overall, the short-term fundamentals do not strongly support the continued rise in prices, and the logic of steel price increases is mainly driven by macroeconomic factors. Therefore, the expectation of a significant correction in steel prices in the short term may not be strong, and we need to wait until the expectations of the important meeting at the end of the month are realized before we can see whether steel prices can return to the pricing logic of the fundamentals.

Steel Home: Last week, domestic steel prices continued to rise, mainly due to the systematic macroeconomic benefits of the Central Financial Committee's anti-involution and expansion of domestic demand, as well as the urban work conference, which boosted market sentiment. From the cost side, the price of coking coal has risen significantly, the first round of price increases for metallurgical coke has been implemented, and port ore inventories have continued to decline, supporting iron ore prices and providing strong support for steel prices. From the perspective of fundamentals, steel and raw material prices have continued to rebound, low prices have been repaired, and the possibility of steel mills actively reducing production is not high, and supply pressure may increase later. From the demand side, after the new US tariffs were implemented on August 1, the uncertainty of China's foreign trade exports has increased. In fact, exports of some home appliances have already declined in May, affecting steel demand. From the recent market perspective, whether steel mills can implement production cuts is still the key. The Ministry of Industry and Information Technology stated that the steady growth plan for ten major industries such as steel and petrochemicals is about to be launched, and macroeconomic sentiment may continue to improve. It is expected that domestic steel prices will mainly fluctuate and strengthen this week.

Lange: Since the beginning of this year, the international environment has been complex and changeable, the international economic and trade order has suffered heavy blows, and instability and uncertainty have increased. In the face of this complex situation, the implementation of a more proactive and effective macroeconomic policy has enabled the national economy to withstand pressure and forge ahead. The economic operation has been generally stable and steadily improving, production and demand have grown steadily, new driving forces have grown stronger, and new progress has been made in high-quality development. However, it should also be noted that there are many external unstable and uncertain factors, and insufficient domestic effective demand. The foundation for economic recovery and improvement still needs to be strengthened. We must coordinate domestic economic work and international economic and trade struggles, unswervingly do our own thing, further strengthen the domestic cycle, use the certainty of high-quality development to cope with external uncertainties, and promote the sustained, stable, and healthy development of the economy. From the perspective of the black commodity futures market, the black commodity sector has generally maintained an upward trend, with iron ore recording the highest increase last week, with the main contract rising by 2.68% to 785, coking coal rising by 1.81% to 926, and rebar and hot-rolled coils continuing to rise on the basis of last week, reaching a new high in three months. The main contract of rebar closed at 3147, up 23 points daily, up 14 points from last week's close, and the weekly settlement price was 3156, up 32 points. From the weekly chart, it has closed positive for five consecutive weeks, and last week's closing price continued to exceed last week's, forming a strong rebound trend, but the stability after last week's rise was slightly worse. There is still room for upward exploration this week, but as the price rises, the upward pressure increases, and there may even be a high-level shock and decline. The reference operating range is 3130-3230. 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 continues to weaken, pig iron production remains stable, but the output of different varieties continues to decline. On the demand side: due to the continuous strengthening of macroeconomic policies, the futures and spot markets have continued to rise, and the release of market speculative demand has intensified, but the off-season effect still affects terminal demand. On the cost side: due to the continued rise in iron ore prices, scrap steel prices have risen steadily, and coke prices have risen slightly, so the support of production costs has begun to strengthen. Therefore, the Lange Steel Research Center predicts that under the influence of the complex and changeable international environment, the continuous strengthening of macroeconomic policies, the continuous weakening of supply release, the significant release of speculative demand, and the strengthening of cost support from resilience, the domestic steel market this week may continue to fluctuate and rise.

Tang Song: This week, many places in southern and northern China have experienced moderate to heavy rain, with heavy rain in some areas, which has severely restricted the release of steel demand. This seasonal pressure, coupled with weather factors, has led to weak demand. From the supply side, Tangshan's environmental protection restrictions have temporarily ended, and some steel mills resumed production on the 16th, while production control in Shanxi continues. Overall supply has been adjusted slightly, or slightly increased. In addition, the losses of independent electric arc furnaces have improved, and the output of rebar has slightly increased, with the overall supply showing a "slightly increased" trend, with limited increases. This week, it is expected that the supply side may increase slightly, but the increase will be limited. Demand remains weak, and inventories will show a narrow range of adjustments. The overseas market environment is bearish. US inflation data was lower than expected, expectations for a Fed rate cut were lowered, and the room for the US dollar to weaken is limited. At the same time, the trade war is still ongoing, full of uncertainty, but the marginal impact is limited. On the domestic market side, domestic "policy bottom" expectations dominate trading. The Ministry of Industry and Information Technology revealed that the steady growth plan for steel and building materials is about to be launched. Although the economic data in June was poor, the market's expectations for the Politburo meeting at the end of July to increase steady growth and anti-involution are constantly rising, supporting sentiment. And the cost of steel still provides some support for prices. (According to the market price, the cost of iron ore at 800 and coke at 1520 is around 3150), the cost of valley electricity remains at around 3150-3170, and the cost still supports steel prices. Overall, it is expected that the main trend will be a fluctuating and strong upward trend. Rebar futures are expected to operate in the range of 3150-3270.

Youfa Group Han Weidong: The market rebounded today. From a fundamental perspective, the price recovery of coking coal, iron ore, and steel has been satisfactory, and all have escaped the predicament of facing losses. The iron ore index has returned to around US$100, which is the average price in the first half of the year. Imports decreased by 18 million tons in the first half of the year, domestic mines also reduced production, and pig iron production is also good. In the second half of the year, iron ore supply will increase, and pig iron production will decrease month-on-month. From the perspective of supply and demand, there is not much room for further increases. The Tangshan rebar price returned to around 3200 today, which is also around the average price in the first half of the year. However, the current steel industry production is high, and demand in the second half of the year faces certain downward pressure, especially after the new US tariffs begin in August. The uncertainty of exports and indirect exports has increased significantly. Today, new news has been released that a plan to stabilize growth in ten major industries, including steel, is about to be introduced. The production restriction measures everyone expects are not only aimed at curbing excessive competition but also at stabilizing growth. In summary, further market increases are unexpected icing on the cake, mainly due to macroeconomic or systemic positive factors. Demand is unlikely to experience "miraculous" growth in the future. The key to market balance lies in production reduction. Let's continue to operate steadily!