Experts say city—August 25

My Steel: Supply side: Last Friday, the supply of five major steel products was 8.7806 million tons, a week-on-week increase of 64,300 tons, an increase of 0.7%. Last week, the production of long products and flat products showed an inverse trend; the production of long products, especially rebar, declined significantly, mainly due to short-term maintenance of some steel mills' rolling mills, combined with some steel mills transferring molten iron to other products, resulting in a rebound in flat product output. Last Friday, the total inventory of the five major steel products was 14.4104 million tons, a week-on-week increase of 250,700 tons, an increase of 1.8%. The total inventory of the five major products maintained an accumulation trend. From the inventory structure perspective, the pressure of inventory accumulation last week was mainly reflected in social inventories, while factory inventories began to slightly decrease. Demand side: Last week, the apparent weekly consumption of the five major products was 8.5299 million tons, a week-on-week increase of 2.6%; among them, construction material consumption increased by 4.3%, and flat product consumption increased by 1.9%. Among the five major steel products last week, construction material consumption showed a more obvious increase, while flat product demand generally showed resilience. Overall, last week the five major steel products saw increases in both supply and demand, with inventory continuing to accumulate, and the fundamentals were neutral to weak. On the supply side, current demand is still affected by seasonality, so construction steel production may continue to slightly decline; however, hot-rolled coil production may continue to slightly rebound in the short term due to better profits, spot liquidity, and production switching reasons. On the demand side, the suppression of construction steel demand by high temperatures remains, but according to seasonal patterns, the bottom of construction material demand may have appeared and will gradually recover later; however, manufacturing demand remains resilient due to export support. On the inventory side, current inventory may have entered the late stage of the accumulation cycle, with the accumulation rate declining, but short-term accumulation pressure still exists, and fundamentals may not strongly drive prices for now. Overall, fundamental improvement still requires time, so it is difficult to form a sustained upward price momentum temporarily; steel prices may fluctuate weakly at the current bottom, and attention should be paid to the continuous improvement of fundamentals later.

Steel Home: Currently, the domestic steel market is generally fluctuating with a weak trend, and supply pressure is gradually increasing. First, steel mills have basically maintained normal production recently, with little reduction due to maintenance; steel production in July declined month-on-month, but flat product output was significantly higher than the same period. Second, downstream demand is weak; Steel Home’s survey shows steel inventories continue to increase, with the growth rate accelerating in recent weeks. Economic indicators show declines in both investment and consumption growth rates, especially investment. According to our calculations, infrastructure investment showed negative growth in July. Third, cost-driven momentum is weakening; iron ore prices fluctuate weakly, and coke prices continue to rise, reducing steel mills' acceptance. However, the recent "93 Military Parade" has affected production in some steel mills in certain regions, increasing expectations of production cuts. It is expected that domestic steel market prices will show a fluctuating but slightly stronger trend this week. Focus on the impact of the "93 Military Parade" on supply and demand in northern regions, especially steel mill production, steel inventories, and market transactions.

Lange: Since the beginning of this year, through joint efforts and overcoming difficulties, China's economic operation has been stable with progress. However, the severe and complex external environment requires further improvement in the effectiveness of macro policy implementation, enhancing policy targeting and effectiveness, and stabilizing market expectations; it is necessary to focus on key points to strengthen the domestic circulation, using the internal stability and long-term growth of domestic circulation to offset uncertainties in international circulation; efforts should be increased to expand effective investment, leveraging major projects to lead and drive, adapting to demand changes by investing more in people and serving people's livelihood, and actively promoting private investment. From the black series futures market perspective, black commodities overall closed narrowly lower, with final declines within 1%, except for hot-rolled coil; coking coal and coke showed some improvement compared to the night session. Specifically, the main rebar October contract closed at 3119, down 11 points for the day, 69 points lower than last Friday's close, with a weekly settlement price of 3139, down 83 points from last week. Latest open interest was 1.41 million lots, down 26,000 lots for the day, and 207,000 lots less than last Friday. Funds are gradually withdrawing from the October contract, reducing positions and volume, and prices lack driving force; therefore, the October contract is still unlikely to break out of the 3050-3250 wide range this week. Weekly chart shows it temporarily closed above the 20-week moving average; this week, attention should continue on support around 3100. On the daily chart, there is a small rebound in the minor cycle, with weekly resistance near 3165 to watch. From the steel spot market perspective, supply side: due to the impact of product profitability, steel mill capacity release has shifted from strong to weak, but molten iron output slightly increased, and product output varied. Demand side: due to the gradual implementation of regional production restrictions and logistics limitations, combined with the obvious off-season effect, market transactions have significantly weakened. Cost side: due to stable to declining iron ore prices, stable to declining scrap prices, and stable coke prices, production cost support has weakened. Therefore, the Lange Steel Research Center expects that under the influence of a severe and complex external environment, stable economic operation with progress, gradual implementation of production restriction policies, supply release shifting from strong to weak, obvious off-season effects, and weakened cost support, the domestic steel market may fluctuate and weaken this week.

Tang Song: This week, the southern region experiences mostly cloudy and light rain weather with relatively low temperatures, while the northern region mainly has cloudy and sunny weather, with some areas experiencing showers and moderate temperatures. As seasonal influencing factors weaken significantly, steel demand is expected to see a certain degree of recovery. However, although speculative demand is likely to grow due to price weakness and valuations reaching a neutral to low level, some demand restrictions during the military parade will still exert certain pressure on overall demand. Overall, steel demand is expected to remain low and stable this week, with a slight possibility of a small rebound. On the supply side, parade controls have tightened: independent rolling steel enterprises will halt production from August 20 to September 6; steel companies will reduce sintering production by 30%-40% from August 26 to September 4; Tangshan blast furnaces plan to cut production by 30%-40% from August 31 to September 3. Nevertheless, this week does not involve blast furnace production cuts. Previously, some companies considered overproduction during parade-related production restrictions, but as the extent of cuts deepens, overproduction issues improve, and supply is expected to slightly decrease. Additionally, independent electric furnace profits are slightly negative, and rebar production will also slightly decrease. Overall, the steel market supply maintains a high level with a narrow reduction. Steel supply is expected to slightly decrease this week, balancing with stable low demand, making it difficult for supply-demand conflicts to widen further, and steel inventories are expected to slightly accumulate. Recently, the steel market has weakened with fluctuations; the basis between spot and futures has widened, reaching a relatively high level for the year, with spot prices falling less than futures. Market expectations have changed due to parade production restrictions and cooling of hot topics. As the market enters the parade period, expectations enter a realistic phase, facing the choice between spot price catch-up declines or futures rebound and basis repair. Considering current supply and demand, steel supply is expected to slightly decrease this week, demand remains stable at a low level, supply-demand conflicts are unlikely to expand further, and futures have increased resistance to declines. Regarding macro expectations, popular topics like anti-involution are cooling down, and no new domestic drivers are seen yet, but long-term support for the market remains. This week, the market is expected to enter a phase of spot-futures oscillation and adjustment. The October rebar contract focuses on support levels at 3111 for the 10th contract and around 3200 for the 01 contract, with resistance near 3200 for the 10th contract and 3270 for the 01 contract. In the medium to long term, after the parade ends, demand release combined with Federal Reserve rate cut expectations, National Day restocking demand, and policy factors such as the 20th Central Committee's Fourth Plenary Session make the market overall optimistic. At that time, concentrated demand release is expected to drive steel prices up, and favorable macro policies will provide strong market support. Investors should closely monitor policy dynamics and market supply-demand changes to prepare and seize medium to long-term rebound opportunities.

Youfa Group Han Weidong: Last Friday, the black night session started a rebound again. From the price perspective, iron ore prices are at the average level of the first half of the year, coal prices have returned to reasonable valuation levels, and steel prices (strip steel) are less than 100 yuan higher than the first half average. Overall, spot prices are at a reasonable level. However, the October rebar futures contract is heavily discounted, clearly at a low loss level, with signs of recovery before the delivery month. From the current fundamentals, total steel inventory continues to rise, apparent demand declines, and supply-demand balance is unsustainable. Price rebounds and increases will exacerbate this contradiction. In the later market, many disturbance factors will emerge: parade production restrictions, coal, ore, and steel deliveries, the Federal Reserve's September meeting, Russia-Ukraine conflict negotiations, and post-tariff trade rebalancing. From January to July, raw coal production increased by 100 million tons, imports decreased by more than 30 million tons, and subsequent coal production policies will affect coal price trends. The steel industry's production cut targets have been issued to various regions this year, and their implementation affects future steel price trends. In summary, the current fundamentals are weak, raw material and steel prices are moderate, rebar futures are low, and many uncertain disturbance factors remain. Therefore, continue steady operations. From the current situation, steel market prices still cannot break the oscillating pattern.