Steel futures markets may initially decline before rebounding in November.
In late October, domestically Steel Market A wave of phased recovery has emerged, Reinforcing steel bars 、 Hot Rolling The prices of the main rolled-steel contracts rose by 69 yuan/ton and 93 yuan/ton respectively compared to their late-October lows, representing gains of 2.27% and 2.89%, before subsequently surging higher only to retreat afterward. As for November… Steel prices The author believes the trend is likely to initially decline before rebounding.
Recent Analysis of Steel Market Dynamics
The steel market rebound in late October was primarily driven by improving macroeconomic expectations and a marginal uptick in demand. The positive shift in macroeconomic outlook manifested itself in two key areas: First, the Federal Reserve once again cut interest rates during its October policy meeting and clearly signaled that it would end its balance-sheet reduction program by December 1. Meanwhile, China's central bank governor also indicated that the country would resume buying and selling government bonds. Additionally, there are signs that the U.S.-China trade conflict may ease temporarily, with little likelihood of a significant escalation over the next year.
After the National Day and Mid-Autumn Festival holidays, steel demand has also shown marginal improvement. Both rebar and hot-rolled coil inventories have exhibited a volatile yet declining trend compared to the previous week, while apparent consumption of both products has risen week-on-week for the fourth consecutive week. Meanwhile, the latest decline in apparent rebar consumption year-on-year has narrowed to 86,000 tons, and hot-rolled coil consumption has even turned positive, increasing by 132,000 tons year-on-year—marking the second straight week of year-on-year growth.
Real-world demand is nearing its peak—stay tuned for changes in winter stockpiling and speculative demand.
In November, the steel market will enter its off-season demand period. Moreover, based on historical data from the past five years, the peak in steel demand during the second half of the year typically occurs in mid-to-late October. Looking at specific product categories, the decline in demand during November and December will primarily be driven by Architectural steel The contribution from exports has resulted in relatively stable demand for steel plates, which aligns with the recent widening gap between coil and rebar prices. Additionally, a closer analysis of the demand structure reveals that this year’s increase in demand has been primarily driven by exports. In the first three quarters, domestic apparent crude steel consumption fell by 5.24% year-on-year; however, when accounting for the impact of exports, the overall decline in total demand was 2.51%.
Given that the price spread for hot-rolled coil between certain regions and China continued to rebound in late October, the resilience of exports is expected to persist through November and December. Meanwhile, the fourth quarter traditionally marks a peak season for durable goods consumption. On the infrastructure front, at the end of October, the National Development and Reform Commission’s press conference explicitly stated that 500 billion yuan has been allocated from local government debt balance limits, with 200 billion yuan earmarked specifically as special-purpose bonds to support investment and construction projects in several provinces—thus creating some additional demand for accelerated project completion. All these factors are likely to provide solid support for steel demand.
Winter stockpiling and buy-side hedging activities deserve attention. During the recent downturn from late September to the first half of October, the basis between futures prices and spot prices continued to widen, while traders who had previously locked in profits from cash-futures arbitrage positions were steadily taking those gains off the table. Following the extended National Day and Mid-Autumn Festival holidays, the Zhejiang Hangzhou region Rebar Inventory It is showing a持续 downward trend. Currently, the rebar basis remains at 124 yuan/ton, so the short-term process of realizing profits will likely continue. If the basis stays persistently high, and the futures prices fall below the cost level of electric furnace steel production—including electricity and raw materials—this could encourage some buyers holding hedging positions to enter the market. Additionally, winter stockpiling activities are expected to gradually kick off after late November, and the high basis will likely prompt more spot traders to opt for futures-based winter storage strategies instead.
From August to September, the steel market has consistently shown a pattern of weak demand and high supply, leading to continued compression of steelmakers' profits. By the end of October, both long-process rebar and hot-rolled coil had turned profitable, with the proportion of profitable steel plants nationwide dropping sharply—from 68% in early August to just 45% among the country’s 247 steel mills. Meanwhile, steelmakers have grown more willing to proactively cut production for maintenance, resulting in a decline in daily molten iron output from blast furnaces, which fell from a peak of 2.4236 million tons at the end of September to 2.3636 million tons by late October. Looking ahead to November, steel demand is expected to weaken further, prolonging the current loss-making situation for steelmakers. As a result, molten iron production still has room to drop even lower.
Meanwhile, production restrictions in northern regions during November and December may be further intensified. Reports indicate that, in the last week of October, sintering machines in Tangshan, Hebei Province, were already operating at a 50% capacity cut, which is expected to reduce molten iron output by 91,000 tons per day. As the "anti-inward competition" policy continues to roll out, other regions may also see an escalation of production curbs during the heating season. Moreover, with steelmakers facing widening losses, these stricter production limits are likely to become even more feasible to implement.
On the raw material end, Iron ore supply The numbers continue to rebound, with global figures expected to rise further after October. Iron ore Shipment volumes have rebounded for two consecutive weeks, with the latest figure standing at 33.884 million tons. Meanwhile, despite daily molten iron production averaging around 2.4 million tons, iron ore port stocks still surged by 5.42 million tons in October. Moreover, according to the author’s leading indicators, there is a growing possibility that port inventories could continue to rise further. Against this backdrop, the decline in molten iron output may trigger a temporary negative feedback loop across the entire industry chain.
After late November, market focus may once again shift to macroeconomic expectations.
By the end of October, all the major macroeconomic events that had been on market watch have already unfolded—now November is just around the corner. We're entering a phase of temporary macroeconomic calm, and it's expected that during the first half of November, the focus in the black commodity sector will likely remain on fundamental factors. However, after late November, market attention may once again shift back to broader macroeconomic expectations. Given the current policy direction, there remains a possibility—albeit not ruled out—that China could cut interest rates again in late November. Meanwhile, at the beginning of December, the Federal Reserve will hold its final monetary policy meeting of the year; while rate cuts may draw less immediate attention, investors are likely to focus more closely on any signals regarding the end of the Fed's balance sheet reduction program. Additionally, in mid-to-late December, China will convene its annual Central Economic Work Conference, where policymakers may announce further measures to bolster economic stability. Such a series of positive macroeconomic developments could help reignite stability and even spur a rebound in the steel market.
Based on the analysis above, a period of macroeconomic vacuum will emerge after November, while actual demand continues to weaken. This, coupled with the temporary negative feedback triggered by declining molten iron production, Rebar prices There is also the possibility of another dip. However, factors such as resilient exports, strong demand for durable goods during the peak season, and accelerated infrastructure projects may help curb the decline in steel demand. Moreover, after late November, market attention could once again shift back to robust macroeconomic expectations, potentially enabling steel prices to stabilize and rebound once more. The author forecasts that rebar prices will hover around 3,000 yuan per ton, while hot-rolled steel prices are expected to remain steady. Coil plate prices There is strong support around 3,200 yuan/ton.
