Experts say the city—October 27

My Steel: On the supply side, last Friday, the supply of the five major steel products reached 8.6532 million tons, an increase of 83,700 tons from the previous week, representing a growth rate of 1.0%. The rise in production last week was primarily driven by long products, as earlier inventory reductions in plate products had put significant pressure on supply. In contrast, long products did not face similar inventory pressures, prompting plate producers to cut output instead, thereby easing overall supply constraints. Last week, the total inventory of the five major steel products stood at 15.5485 million tons, declining by 274,100 tons compared to the prior week—a drop of 1.7%. Notably, the decline in total inventory continued, with the rate of reduction accelerating from the previous week. Looking at the inventory structure, the increased inventory drawdown was mainly observed in social inventories, while factory inventories saw a narrower decline than the previous week. On the consumption front, last week, the apparent weekly consumption of the five major steel products totaled 8.9273 million tons, up 2.2% from the previous week. Among these, construction material consumption rose by 4.4%, while plate product consumption edged up by 1.1%. As the peak season is drawing to a close and the off-season approaches, downstream industries are experiencing some mild demand for accelerated project completion ahead of the slower period. Coupled with improved funding availability among downstream players last week, demand for long products outpaced that of plate products. Overall, both supply and demand for the five major steel products expanded last week, leading to a wider-than-expected decline in total inventory. This suggests a neutral-to-positive market backdrop, with no immediate signs of significant pressure. However, from a supply perspective, current spot profit margins for steel remain under pressure, limiting room for further production increases. Moreover, given that steel inventories continue to decline, output is likely to fluctuate within a narrow range in the near term, with limited upside or downside potential. On the demand side, as the off-season deepens, underlying rigid demand for steel continues to face downward pressure, pushing the market into a sustained decline. From an inventory standpoint, with expectations of stable supply but weakening demand, steel inventories are expected to see their rate of decline gradually slow down in the short term. In summary, as the off-season draws nearer, the fundamental pressures on the steel market will become more pronounced. Yet, in the short term, positive macroeconomic factors—such as anticipated boosts from the 14th Five-Year Plan and the upcoming China-U.S. economic and trade dialogue—continue to provide favorable support for steel prices, potentially keeping spot prices volatile yet trending slightly stronger.

Steel Home: High production levels and ongoing uncertainties in the U.S.-China trade dispute remain the primary challenges facing the domestic steel market. Currently, domestic blast furnace operating rates are still at historically high levels for this time of year. However, as steelmakers’ profit margins narrow, steel output may decline in the coming months. While steel inventories have slightly decreased, the reduction has been modest—particularly for plate products, where stock levels remain relatively high. In the first three quarters of this year, China’s GDP grew by 5.2%, leaving the full-year target of 5% well within reach with little pressure. Moreover, there’s unlikely to be significant policy support or a surge in construction demand before the end of the year. In the short term, the U.S.-China economic and trade negotiations will continue to exert considerable influence on the market. If talks progress smoothly and lead to a summit between Chinese and U.S. leaders by month’s end, it could help boost market confidence. Still, risks and uncertainties persist. Meanwhile, the second round of measures aimed at stabilizing coking coal prices is set to take effect soon, while iron ore prices remain volatile at elevated levels—both factors providing strong cost-side support. Overall, domestic steel prices are expected to trend steadily but slightly stronger this week.

Lange: During the "15th Five-Year Plan" period, we must comprehensively advance the "Five-in-One" overall layout, coordinate the implementation of the "Four Comprehensive" strategic plan, and manage both domestic and international priorities in tandem. We will fully, accurately, and comprehensively embrace the new development philosophy, accelerate the establishment of a new development pattern, and uphold the overarching principle of pursuing progress while maintaining stability. Central to our efforts will be prioritizing economic development, focusing on promoting high-quality growth as our primary theme, and harnessing reform and innovation as the fundamental driving force—thereby fostering both qualitative improvements in economic performance and steady, balanced quantitative expansion. Looking at the black commodity futures market, prices of black products showed mixed movements today. Among them, the main coking coal and coke contracts continued to lead gains, each surging more than 1% during the day. Meanwhile, iron ore and threaded steel closed slightly lower within a narrow range, while hot-rolled coil edged up marginally. The most active January threaded steel contract ended at 3,046 yuan, down 23 points from the previous day—but still 9 points higher than last Friday’s close. The weekly settlement price stood at 3,058 yuan, just 2 points above last week’s peak. Meanwhile, open interest reached 2.05 million contracts, an increase of nearly 50,000 compared to last Friday. Currently, the weekly price trend remains relatively flat, hovering around 3,050 yuan without breaking upward. On the daily chart, prices have resumed their downward momentum, raising concerns about further declines in the near term. This week, the expected trading range is between 2,980 and 3,100 yuan. From the perspective of the spot steel market, on the supply side, steelmakers have slightly increased production capacity due to favorable profit margins across product categories and the anticipation of upcoming policy announcements. Although molten iron output continues to see modest growth, performance varies significantly among different steel product segments. On the demand side, as the market gradually moves toward the implementation of post-meeting expectations, speculative buying activity has intensified, leading to improved transaction volumes across various steel product markets. Meanwhile, on the cost front, although iron ore prices edged up slightly, scrap steel and coking coal prices remained stable. This shift has strengthened the overall cost support for steel production. Given these factors—the expectation of a Federal Reserve rate cut, the transition from peak to off-season demand, the moderate increase in supply, rising market turnover, and the strengthening cost support—Lange Steel Research Center anticipates that China’s domestic steel market may experience a mild downward trend this week.

Tang and Song Dynasties: This week remains in the traditional peak demand season. As temperatures cool and construction conditions improve, downstream construction sites are accelerating their pace, leading to a continued slight month-on-month increase in procurement volumes of construction steel. At the same time, end-users are showing renewed enthusiasm for stocking up. Plate demand continues to grow steadily, supported by robust activity in the automotive and home appliance industries. Overall, total demand is expected to keep expanding. On the supply side, many steel products are currently operating at a loss, prompting some steelmakers to schedule maintenance. Additionally, regions like Tangshan are implementing environmentally friendly production restrictions, which will likely result in lower blast furnace utilization rates across the industry. Meanwhile, independent electric arc furnace mills are also facing losses, keeping rebar output at historically low levels. As a result, overall supply is set to contract slightly this week. Looking ahead, we anticipate that steel supply will decline modestly this week, while demand continues to pick up, driving another round of inventory reductions. From a cost perspective, the coking coal market has remained resilient recently, with prices staying elevated. Moreover, the second round of price hikes in the metallurgical coke market is providing some support to steel prices. Internationally, expectations for a U.S. Federal Reserve rate cut in October remain strong. However, uncertainties persist in China-U.S. trade relations, as President Trump continues to balance tariff threats against his willingness to engage in negotiations—creating both risks and potential opportunities for the market. Domestically, market participants are optimistic about upcoming macroeconomic policies, such as those likely to emerge from key events like the Fourth Plenary Session of the 20th Central Committee. Yet, the timing and actual impact of these policy measures remain uncertain, potentially dampening market confidence and limiting the full realization of steel demand. Against this backdrop, the official manufacturing PMI for October is expected to rebound above 50%, signaling an overall improvement in manufacturing sector sentiment. Overall, we forecast that steel supply will shrink slightly this week, while demand continues to strengthen, leading to a notable decline in steel inventories. Supported by favorable cost dynamics and driven by the peak demand season, steel prices are likely to stay relatively stable or even edge higher. However, given lingering uncertainties about the effectiveness of macroeconomic policies and ongoing concerns over China-U.S. trade relations, the upside for steel prices may be limited. As a result, the market is expected to fluctuate within a broadly bullish range. For rebar futures, watch closely for resistance around 3120; breaking through could open the door to gains toward 3180. On the downside, support is expected near 3040.

Han Weidong of Youfa Group: The Fourth Plenary Session concluded successfully, kicking off a new round of China-U.S. negotiations—and finally laying to rest all macroeconomic uncertainties. Moving forward, the steel industry will once again focus on fundamental market dynamics. This October, despite an initially weak start to the peak season, demand has gradually strengthened over the past 10 days, presenting a decent opportunity for businesses to capitalize on the final stretch of the旺季. Meanwhile, Tangshan’s strip steel settlement price stands at 3,170 yuan, down 90 yuan from last month—a second consecutive monthly decline. Industry players are now pinning their hopes on identifying a potential winter-stocking low point in the coming months. Looking ahead, the primary challenge for the market remains excessive production levels. Fortunately, recent robust demand has helped ease the current supply-demand imbalance. However, as the off-season approaches, this balance is likely to tilt sharply in the opposite direction, inevitably pushing steelmakers to cut output. Moreover, the exceptionally low futures prices for rebar and coking coal delivered in September and October this year have sent ripples of concern through the market, casting a highly negative impact. Such an unfair and volatile futures market is no different from a rigged casino—both notorious for causing widespread harm and eroding trust. Given the prolonged negative growth in fixed-asset investment over recent months, future demand is expected to face significant pressure. Therefore, companies must adopt a cautious and steady approach in their operations moving forward. It’s time to let go of unrealistic expectations—unless we witness a substantial drop in prices accompanied by large-scale production cuts from steel mills, any attempt to build up inventory or prepare for winter stockpiling would remain unwise.