Experts say the city - July 28

My Steel: In terms of supply, the supply of major steel varieties last Friday was 8.6697 million tons, a decrease of 0.122 million tons week-on-week, a decrease of 0.1%. Steel production decreased this period, with hot-rolled coils and wire rods showing a more significant decrease; last Friday, the total inventory of major steel varieties was 13.365 million tons, a decrease of 0.116 million tons week-on-week, a decrease of 0.1%, but the inventory changes of construction materials and plates showed some divergence, with construction materials maintaining destocking and plates continuing to accumulate inventory; in terms of consumption, the weekly consumption of major varieties last Friday was 8.6813 million tons, with construction materials consumption increasing by 2.7% week-on-week and plate consumption decreasing by 1.7% week-on-week. Last Friday, the consumption changes of construction materials and plates among the major varieties showed some divergence. In terms of supply, the demand resilience in the current steel off-season is relatively strong, but steel mills' profits remain at a high level, and the overall production reduction space is limited. Regarding rebar, the current steel mill profits are at a relatively high level in the past two years, and steel mills' production enthusiasm is high, and there is still room for short-term production increase; in terms of inventory, after the price rebound, the mid-and-downstream have a certain replenishment willingness, and the off-season accumulation is lower than expected; in terms of demand, steel demand maintains resilience, and with the continuous fermentation of recent macroeconomic anti-involution and raw material coking coal shutdown news, steel prices continue to rise, further stimulating speculative demand to emerge.

Steel Home: The recent continuous rise in prices in the black market, including steel, is mainly driven by a series of positive macroeconomic factors and anti-involution. From the current market perspective, positive factors include: First, market sentiment continues to improve, especially the online rumors that the National Energy Administration is inspecting coal mines for overcapacity production, driving up black prices with coking coal; second, cost support is obvious, with mainstream regional coke prices having three consecutive rounds of price increases, and iron ore generally rising; third, steel has not shown a significant accumulation of inventory, and the overall market supply and demand are balanced. Negative factors: First, long and short process steel mills are operating at full capacity, and steel mills have no signs of production reduction, and there is a possibility that supply and demand will shift from balance to imbalance in the later period; second, black futures continue to rise sharply, and there is a risk of profit-taking in the later period. Overall, it is expected that domestic steel prices will continue to rise this week, and operationally, it is advisable to gradually reduce inventory and realize profits, and mainly avoid adjustment risks.

Lange: Currently, the complexity and uncertainty of the external environment have increased, structural contradictions in some industries have become prominent, and some enterprises are still facing many difficulties in production and operation. However, it should also be noted that various support policies are continuously exerting their efforts, various reform measures are being accelerated, and the certainty of China's high-quality economic development is continuously increasing, and the fundamentals of steady growth in the industrial economy have not changed. We must solidly promote the integration and development of technological innovation and industrial innovation, promote the construction of a national unified large market, promote the optimization and upgrading of industrial structure, enhance the resilience and security level of industrial chains and supply chains, strengthen industry governance with a market-oriented mindset and the rule of law, promote the orderly exit of backward production capacity, continuously improve the efficiency of industrial economic operation, and consolidate the upward trend of the macroeconomic recovery. From the perspective of black commodity futures, most black commodities have risen sharply, with the main coking coal opening its fourth daily limit on Friday, closing at 1259, coke and rebar rising by more than 2%, hot-rolled coils rising by 1.98%, and only iron ore slightly falling by 9 points to 802.5. From a weekly perspective, coking coal rose by 35.01% in a week, coke rose by 15.53%, and rebar rose by 6.34%. Specifically, the main rebar 10 contract closed at 3356, up 76 points daily, up 209 points from the closing price last Friday, the weekly settlement price was 3270, up 140 points from last week. The latest position is 1.998 million lots, a decrease of 78,000 lots from last Friday. Last week's prices rose sharply, opening a large-scale upward trend, the weekly resistance level is around 3429, and there is still room for a surge this week, but if coking coal falls sharply, it will definitely affect rebar and hot-rolled coils, and the risk of a decline needs to be prevented. From the perspective of the steel spot market, on the supply side: due to the impact of the profit and loss of varieties, the steel mills' capacity release intensity has turned from weak to strong, pig iron production has slightly increased, and the output of varieties has turned from decline to rise. On the demand side: due to the rapid spread of anti-involution and the impact of factors such as mine safety, the black commodity futures and spot markets have also continued to experience a sharp rise, and market speculative demand has significantly expanded, but the off-season effect still affects terminal demand. On the cost side: due to the steady rise in iron ore prices, the steady rise in scrap steel prices, and the slight rise in coke prices, the support of production costs continues to strengthen. Therefore, the Lange Steel Research Center predicts that under the influence of the complex and changeable external environment, the rapid spread of anti-involution, the change of supply release from weak to strong, the significant expansion of speculative demand, and the strengthening of cost support, the domestic steel market this week may rise sharply and then fall back.

Tang Song: This week, high temperatures, heavy rains, and typhoons frequently occurred in the south, and rainfall increased in the north, with local high temperatures, unfavorable weather conditions created seasonal pressure on terminal demand, demand release was limited, and the overall performance was weak. In terms of exports, the recent sharp rise in domestic steel prices has led to an increase in the cost of steel exports from China, weakening price competitiveness, and it is expected that the volume of steel exports will decrease. However, the market still has certain expectations for speculative demand, and some investors are making cautious purchases based on low prices, but the overall scale is limited. Overall, demand is expected to show a slight downward trend. From the supply side, although some regions are still implementing production control policies, the overall production enthusiasm of steel companies is still high, which keeps steel production at a high level. In addition, the profits of independent electric arc furnaces have recovered, further pushing up the slight increase in rebar production. In summary, the overall supply of the steel market shows a slight increase. This week, overall, it is expected that the supply side will increase slightly, demand growth will be limited, and inventories may increase slightly. Internationally, the United States and the European Union are close to reaching an agreement, which may impose a 15% tariff on European imported goods, lower than the previously threatened 30%. If reached, it will ease global trade tensions, stabilize market expectations, and avoid the risk of tariff escalation. This positive signal has a certain boost to market sentiment. Although the uncertainty of the global trade pattern is still high, the easing of trade tensions is generally beneficial to the global economy and the steel market. Domestically, the Politburo meeting in July is about to be held. The July Politburo meeting will affirm the resilience of the economy in the first half of the year, analyze the instability of the international environment, emphasize the general tone of stability amid progress, maintain policy continuity and stability, and flexibly adjust at the same time. The meeting will also release signals that are linked to the "14th Five-Year Plan", emphasizing forward-looking and strategic layout, focusing on multiple aspects such as stabilizing growth, adjusting structure, promoting reform, benefiting people's livelihood, and preventing risks, providing direction and policy support for the economic work in the second half of the year and future development. In addition, the meeting is expected to strengthen the "anti-involution" policy, clarify key industry governance measures, and promote industrial upgrading and high-quality economic development. These policy expectations provide long-term benefits for the steel market. Although the speed and intensity of progress are affected by various factors, they are generally conducive to market stability and demand recovery. Although there is an expectation of accumulated contradictions in steel supply and demand, the macro level and news are still the dominant core. The current macroeconomic atmosphere is relatively warm, providing a favorable external environment for the steel market. From the supply side, due to the impact of the military parade in September, there is an expectation of production control and restrictions in the Beijing-Tianjin-Hebei region in August, which will limit the supply of steel to a certain extent. However, the cost support for steel is strong. Based on the market price calculation, iron ore is 800 yuan, coke is 1700 yuan, and the market cost is around 3240 yuan, and the valley electricity cost is maintained at around 3220 yuan. The cost still supports the steel price. As commodity prices continue to rise, market concerns about the rapid rise in prices are increasing, and price window guidance is strengthening, which will lead to increased market cautious sentiment, and price fluctuations may be significantly enhanced. However, overall, it is expected that steel prices will still maintain a volatile and strong upward trend this week.

Youfa Group Han Weidong: Recently, driven by favorable macroeconomic conditions and an anti-involution spirit, the stock market, bulk commodities, and ferrous metals have seen a synchronized surge! Although export volumes are beginning to decline, the goods currently being delivered are mainly from previous contracts and haven't yet reflected the current situation. Steel inventories have remained relatively stable for five consecutive weeks! The current supply-demand imbalance is not significant, primarily driven by sentiment and expectations! It's worth noting that the anti-involution movement is still in the "stage of spiritual communication and implementation." Coal mines and steel mills haven't reduced production, and the market is immersed in the euphoria of a bright future. Currently, mines, steel mills, and steel traders are all in a win-win situation. Everyone should cherish this rare price increase; it's a bonus this year. Remember to secure your profits. Because production cuts haven't begun, when prices rise significantly above the estimated value after future production cuts, and when a supply-demand imbalance occurs, if production cuts haven't been implemented in time, risks will follow. Currently, it's crucial to align procurement and production with sales, ensuring current profitability and navigating this special period steadily. In the future, when production decreases, demand matches supply, and prices return to reasonable levels, we can finally rest easy! From a valuation perspective, coking coal prices have exceeded the upper valuation limit, and the January futures price of steel has reached a level that discourages winter storage. Besides prudent management, we must also be vigilant, monitoring market changes. After all, the significant price increase without production cuts has created a short-term bubble.