Experts say city — September 9

My Steel: Supply side: Last week, the supply of five major steel products was 8.6065 million tons, down 239,600 tons week-on-week, a decrease of 2.7%. Last week, both long products and flat products showed a decline in production, with a larger drop in flat products, mainly due to profit contraction and environmental production restrictions in North China; the total inventory of the five major steel products last week was 15.007 million tons, up 328,200 tons week-on-week, an increase of 2.2%. 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 inventory, while factory inventory only slightly accumulated; on the demand side, the apparent weekly consumption of the five major products last week was 8.2783 million tons, down 3.5% week-on-week: construction material consumption fell by 1.8%, flat product consumption fell by 4.4%. Due to the seasonal low demand not yet fully dissipated, consumption of construction and flat products among the five major steel products showed some decline last week. Overall, last week both supply and demand of the five major steel products declined, inventory continued to accumulate, fundamentals were neutral to weak, also reflecting that negative feedback risks still exist. On the supply side, with the lifting of environmental production restrictions in North China and steel mills not yet at the marginal level of loss leading to shutdown, the short-term space for production decline may be limited; on the demand side, the peak season of "Golden September" has arrived, downstream demand will show marginal recovery, but construction material demand elasticity may not be strong, with focus on the rebound strength of flat product demand later; on the inventory side, current inventory may have entered the late stage of accumulation cycle, and the accumulation situation is expected to reverse, but the premise remains that steel mills must control production to prevent too rapid production rebound that delays the inventory destocking turning point. In the short term, the fundamental reality pressure on prices downward has not been fully lifted. Overall, continuous improvement of fundamentals still requires time, steel prices may fluctuate weakly at the current bottom to verify changes in production and demand this week.

Steel Home: Since August, the steel market trend has generally been weak, partly due to the weakening of macroeconomic positive drivers and partly due to weak off-season demand. In September, both supply and demand in the steel market showed an increasing trend. On the supply side, steel mills are basically at full production, especially enterprises focusing on flat products; on the demand side, downstream industries have entered the traditional consumption peak season, with demand for industrial and construction materials better than last month; on the financial side, the central bank conducted 1 trillion yuan reverse repos to release liquidity, and expectations of a Federal Reserve rate cut have intensified. On the downside, first, steel inventories continue to increase, and second, steel mills initiated the first round of coke price reductions, weakening cost support. Overall, it is expected that domestic steel market prices will show a fluctuating and slightly strong trend this week.

Lange: Currently, the comprehensive effects of policies to expand domestic demand and counter internal competition have initially appeared, but market-driven demand contraction still shows a developing trend, and insufficient demand continues to put considerable pressure on enterprise production and operations. It is necessary to significantly increase the counter-cyclical adjustment of macroeconomic policies, substantially expand government investment in public goods and services, drive a significant increase in market orders, stimulate enterprise production and investment activity, improve employment and residents' income significantly, and sustain consumption recovery to quickly strengthen the positive development trend of economic recovery. From the black series futures market perspective, black coking coal and coke surged significantly on Friday, while other varieties rose slightly. The main rebar January contract closed at 3143, up 33 points daily, 17 points lower than last week's close of 3160, with a weekly settlement price of 3119, 72 points lower than last week, overall price still below last week. The latest open interest is 1.737 million lots, an increase of 307,000 lots from last Friday, showing that after the main force shifted positions and rolled over, open interest rose rapidly. The weekly low of 3088 has rebounded 55 points, and the daily 3100 level has been effectively supported. This week may see a slight rebound based on this level, with resistance near 3165 and further testing near 3200. From the steel spot market perspective, supply side: due to the impact of product profitability, steel mill capacity release continues to weaken, pig iron output has decreased, and product output has also declined. Demand side: due to the transition from off-season to peak season, market merchants' stocking demand has gradually increased, but market transactions remain unstable. Cost side: due to stable to strengthening iron ore prices, slight decline in scrap prices, and stable coke prices, production cost support remains resilient. Therefore, Lange Steel Research Center expects that under the influence of many external uncertainties, domestic economic recovery, demand transition from off-season to peak season, continued weak supply release, uneven market transactions, and resilient cost support, the domestic steel market may fluctuate with a slightly strong trend this week.

Tang Song: This week the market enters the "Golden September" period. Some regions in the north and south still have rainfall, but the seasonal impact has significantly weakened. Coupled with the end of production restrictions due to the military parade, demand is expected to gradually release. Demand is expected to slightly recover this week. From the supply side, with the lifting of production restrictions for the military parade, steel companies are resuming production one after another. Supply is expected to slightly increase this week. Independent electric furnace profits are slightly negative, and rebar production maintains a slight reduction. Overall, the total supply in the steel market has recovered, but steel output may be limited. Overall, steel supply and demand are expected to slightly rebound this week, supply-demand contradictions may not significantly improve, and inventory may still slightly accumulate. From September 8 to 12, the 17th meeting of the 14th National People's Congress Standing Committee will review a series of policies and laws, which may further clarify steel industry capacity control, environmental requirements, and macroeconomic policy directions. Once policies are clarified, these measures will help stabilize market expectations and provide some support to the market. Additionally, August financial and monetary data will be released, with expectations that M1 and M2 will continue their upward trend, new loan scale will be moderate but relatively sluggish in August, and overall money supply will maintain growth. The August PPI may turn positive month-on-month. In the short term, with rising expectations of a Federal Reserve rate cut and important domestic meetings, the release of August financial and monetary data will increase macroeconomic event disturbances, possibly boosting the market, but concerns about negative feedback remain, and futures market volatility is expected to increase. Under many uncertainties, the market is in a stalemate between bulls and bears, with a complex overall trend. The overall downside space is relatively limited, but upward momentum is also clearly insufficient, so the possibility of fluctuating adjustments remains high. For rebar futures, support near the previous low of 3100 should be watched; if broken, retreat to 3042. On the upside, resistance levels at 3153 and 3220 should be noted.

Youfa Group Han Weidong: After major national events, the market will quickly return to fundamentals. Currently, steel production after resumption is too high, and domestic and foreign demand cannot absorb this production, leading to gradual inventory accumulation. After a period of time, contradictions will erupt, causing further price declines. However, since prices are currently in a low range and steel mills have poor profitability, the decline will not be very large, then steel mills will be forced to reduce production, and prices will rebound again! In this process, if there is a certain degree of "anti-internal competition" production restriction, prices will directly rebound and rise. The operation is very simple: currently operate steadily; if prices later fall to levels that cause steel mills to reduce production, inventory can be increased for early winter storage. If there is a strong administrative production restriction during operation, inventory can be appropriately increased. What is certain now is that domestic demand and exports will not have miracles, and future prices depend on production!