Experts say city — September 15

My Steel: Supply: Last week, the supply of five major steel products was 8.5724 million tons, a week-on-week decrease of 34,100 tons, a decline of 0.4%. Except for hot-rolled coil, the production of the other four major steel products declined week-on-week, mainly driven by shutdowns and maintenance at some regional steel mills, resulting in insufficient or shifted molten iron supply. Inventory: The total inventory of the five major steel products last week was 15.1461 million tons, a week-on-week increase of 139,100 tons, up 0.93%. The total inventory of the five major products increased week-on-week: factory inventory decreased mainly due to rebar contribution, while social inventory increased, also mainly due to rebar. Consumption: The weekly consumption of the five major products was 8.4333 million tons, up 1.9%; among them, construction material consumption decreased 0.9% week-on-week, while sheet consumption increased 5.6%. The apparent consumption last week showed a decline in construction materials and an increase in sheets, reflecting differences in downstream demand between hot-rolled coil and rebar. Supply: Some regional steel mills shut down for maintenance, causing insufficient or shifted molten iron supply. The production of the five major products slightly declined, with differentiation among varieties: rebar production decreased while hot-rolled coil production increased. Current steel mill production profits remain acceptable, so short-term production is not expected to decline significantly. Demand: Differentiation among varieties exists; rebar demand is constrained by weak seasonal consumption and declining real estate investment and construction, with cautious downstream purchasing sentiment. Hot-rolled coil demand is supported as northern transportation controls ease and market logistics normalize, releasing previously suppressed demand. This shows a pattern of declining construction materials and increasing sheets, with the coil-rebar price spread further widening recently. Inventory of the five major steel products continued to rise last week, indicating ongoing inventory pressure. Cost: The first round of coke price reductions has been implemented, with expectations of further reductions, weakening overall cost support. In summary, short-term demand is recovering but medium- to long-term market expectations remain cautious, with no obvious peak season characteristics. Apparent rebar demand declined significantly last week, and steel prices are expected to fluctuate in the short term.

Steel Home: Recently, domestic steel market prices have generally shown slight fluctuations, with price changes varying across regions but with small amplitudes. The current market situation faces two main factors: first, stable supply and increasing demand. According to Steel Home's recent survey, blast furnace operating rates have remained above 90%, reaching a five-year high for the same period. Production growth potential is limited, but seasonal demand recovery is certain, with differences in the strength of the rebound reflected in steel inventories, which showed a clear slowdown in accumulation last week. Second, costs provide support but the driving force is weakening. The recent steel price rebound was also driven by costs; with expectations of restocking before the National Day holiday, and the first round of coke price reductions implemented, further declines are possible. Overall, domestic steel market prices are expected to continue slight fluctuations this week.

Lange: Currently, China's economic operation still faces many unstable and uncertain external factors. Residents' consumption capacity and confidence need further improvement, while enterprises face intensified competition and declining investment returns, among other risks and challenges. It is necessary to significantly strengthen counter-cyclical macroeconomic policies, substantially expand government investment in public goods and services, and drive a significant increase in market orders. Focus should be on key areas to plan and reserve a batch of important projects needed for development, feasible for localities, and expected by the public. The strategy to expand domestic demand must be firmly implemented, further strengthening the internal circulation, optimizing the external circulation, and promoting the dual circulation, to quickly enhance the positive trend of economic recovery. From the black commodities futures market perspective, most black commodities closed higher, while iron ore slightly declined. The main rebar contract closed at 3127, up 26 points daily, down 16 points from last Friday's close, with a weekly settlement price of 3113, down 6 points from last week. Latest open interest was 1.912 million lots, an increase of 172,000 lots from last Friday, but a daily reduction of 88,500 lots, lower than the previous trading day's 2 million lots. Weekly technical patterns remain weak, but daily prices broke above the previous two days' bearish candles, with significant short-covering. Without obvious negative news, a rebound likely starts near 3100. Resistance is near 3150, with support temporarily between 3100-3075. In the steel spot market, supply: due to product profitability and peak season expectations, steel mill capacity release has shifted from weak to strong, with increased molten iron and product output. Demand: as the market transitions from off-season to peak season, merchants' stocking demand gradually increases, but market transactions remain unstable. Cost: iron ore prices rose slightly, scrap prices remained stable with slight increases, and coke prices fell slightly, maintaining resilient production cost support. Therefore, Lange Steel Research Center expects that under multiple external uncertainties, domestic economic recovery, upcoming demand peak, supply release from weak to strong, uneven market transactions, and resilient cost support, the domestic steel market may experience a fluctuating rebound this week.

Tang Song: This week enters the "Golden September" period, with downstream industries' demand for steel gradually warming up. Industries such as construction, machinery manufacturing, and automotive have begun increasing steel procurement, further enhancing market activity. Current market trends show demand is gradually releasing and is expected to continue and strengthen this week. Specifically, market demand is likely to slightly rise this week, with a more active trading atmosphere. On the supply side, with the end of production restrictions due to the military parade, long-process steel enterprises have gradually resumed production. However, due to continued shrinking profit margins, production enthusiasm is somewhat suppressed, making it difficult for output to return to high levels. Long-process steel supply is expected to remain generally stable with minor adjustments this week. Meanwhile, independent electric furnace profits remain negative, leading to a slight reduction in rebar output. Independent electric furnace enterprises face significant cost pressures and are unlikely to achieve profitability in the short term, resulting in low production enthusiasm and limited output growth. Overall, steel market supply this week will mainly see narrow adjustments. In summary, steel supply is expected to slightly adjust, demand to slightly recover, supply-demand contradictions to continue improving, and inventories to slightly decline. With demand gradually warming and supply slightly reduced, the steel market's supply-demand balance will improve to some extent, and inventory levels are expected to decrease. On the macro front, the Federal Reserve's policy meeting this week is expected to result in a rate cut, which is basically certain. However, the market has not shown strong reactions to the rate cut expectation, possibly because it has been partially priced in or due to cautious and divergent views on the actual impact amid a complex economic environment. Additionally, domestic August economic data shows continued weakness in investment and consumption, unlikely to boost the market. Market participants remain concerned about the macroeconomic outlook. In the short term, steel supply-demand contradictions show signs of easing but with limited improvement space. The macro environment is unlikely to provide a strong market boost. Supported by restocking before the National Day holiday, the market has some downside support but lacks upward momentum. Steel prices are expected to fluctuate and adjust this week. For rebar futures, support near the previous low of 3088 should be watched, with resistance at 3214.

Youfa Group Han Weidong: Entering September, market demand saw a significant month-on-month increase compared to August, which to some extent alleviated the supply-demand conflict. Inventories announced by various websites either declined or showed slight growth. Steel mills' profits were sharply compressed, losses increased, and market prices were cornered with minor fluctuations; the price fluctuation of Tangshan strip steel over 12 days in September was only 30 yuan. The volatility caused by futures delivery in September was not significant. Upcoming news includes the Federal Reserve's interest rate meeting, which, if in line with expectations, will have little impact on the market. Going forward, the main focus is on changes in steel mill production. If there are production cuts, the market decline will be limited; if production remains at current levels, once the peak season demand passes, the market will face considerable pressure. However, since current prices are at average levels, if prices drop near this year's previous lows, inventory can be appropriately increased. In the future, under the long-term pattern of "anti-involution," no matter how much current prices fall, they will rebound later. The overall situation this year remains volatile with limited fluctuation space. It is advisable to increase purchases appropriately when prices are low and reduce inventory when prices are high. The key focus should be on daily operations ensuring reasonable price spreads and profits.