Experts say city—December 1st

My Steel: On the supply side, last Friday, the supply of the five major steel products reached 85.571 million tons, an increase of 58,000 tons, or 0.7%, from the previous week. Among the five major steel products, production declined week-on-week except for rebar; the core driver behind this trend is that steel mills have resumed production after maintenance periods ended. On the inventory front, total inventories of the five major steel products stood at 14.0081 million tons last week, down 3.229 million tons, or 2.25%, from the previous week. The total inventories of the five major products all declined week-on-week: mill inventories fell week-on-week, with rebar contributing most significantly to the decline; and social inventories also fell week-on-week, again largely driven by rebar. In terms of consumption, the weekly consumption of the five major products last week was 8.88 million tons, down 0.7%; among them, construction material consumption fell 0.3% week-on-week, while plate consumption rose 2.3% week-on-week. Overall, apparent consumption of the five major products showed a pattern of declining construction materials and rising plates. On the supply side, as steel mill profits have recently improved, some mills have resumed production after maintenance, resulting in a slight increase in output of the five major products last week. On the demand side, according to a survey by Centennial Research, as of November 25, the funding completion rate for sampled construction sites was 59.56%, down 0.24 percentage points from the previous week. Specifically, the funding completion rate for non-residential construction projects was 60.68%, down 0.43 percentage points from the previous week; while the funding completion rate for residential construction projects was 53.99%, up 0.70 percentage points from the previous week. The decline in funding completion rates was mainly dragged down by non-residential projects, whose funding declines were the largest in nearly three months, indicating that off-season demand continues to weaken. On the inventory side, total inventories of rebar and hot-rolled coils declined, but the overall pace of destocking has slowed somewhat. Overall, inventories of the five major steel products remain higher than historical averages, and inventory pressure persists. Taken together, demand for finished steel products has entered the off-season, putting upward pressure on subsequent recovery. Overall, both supply and demand remain weak, and fundamental contradictions are not yet obvious. We expect short-term prices of black-series commodities to fluctuate within a narrow range.

Steel Home: Last week, the domestic steel market continued to experience slight fluctuations overall. Currently, upward price movements face pressure from high production levels and weak demand, while downward movements are supported by high costs and low prices. First, high production levels persist: blast furnace and electric furnace utilization rates remain relatively high, and steel mills’ output has not significantly changed—rather, they’ve been adjusting their product mix by reducing construction steel production and increasing the output of various plate products. Second, demand remains weak: the traditional off-season for consumption, coupled with the drag effect from “trade-in” programs, has led to subdued downstream demand. Third, high costs persist: although iron ore prices have been fluctuating narrowly relative to steel prices, coking coal prices have risen for four consecutive rounds, pushing up the cost center and making a short-term reversal unlikely. Fourth, prices remain low: current steel prices are at their lowest level for this time of year in nearly nine years, placing them in the bottom range of the past nine years. Moreover, given that most mills are operating at a loss based on current costs, there’s limited room for further price declines. Therefore, it’s expected that domestic steel prices will continue to fluctuate narrowly this week.

Lange: Currently, the global economy is once again facing significant challenges. Unilateralism and protectionism are on the rise, and various economic and trade restrictions as well as confrontational actions are increasing. However, China’s economic structural adjustment continues to advance steadily, albeit with some growing pains during the transition from old to new growth drivers. Looking ahead, though, we can expect new forms of productive forces to develop and strengthen, new growth engines to keep expanding, and a positive trend toward high-quality economic development. We must remain committed to promoting high-quality development as our central theme, deeply advancing the integrated development of scientific and technological innovation and industrial innovation, continuously optimizing the economic structure, fostering and bolstering new forms of productive forces, and driving both qualitative improvements and reasonable quantitative growth. From the perspective of black-series futures, prices of black-series commodities showed mixed performance on Friday: rebar and hot-rolled coil saw slight gains, while raw materials experienced modest declines; among them, the main coking coal contract fell by 1.99%. Specifically, the main rebar contract (01) closed at 3,110 yuan per ton, up 22 points from the previous day and 53 points higher than last Friday’s closing price. Its weekly settlement price was 3,093 yuan per ton, up 22 points from the previous week. Current open interest stands at 972,000 contracts, down 541,000 contracts from last Friday. With major players shifting their positions heavily, it is expected that the rotation of the main contract will be completed before this Wednesday. Last week, the rebar 01 contract showed a relatively strong upward trend, further increasing from the previous week’s prices and ultimately closing above the 3,100-yuan mark, nearing Monday’s high. The short-term rebound trend has yet to end and is likely to continue, potentially pushing prices to new highs. This week’s target range could be around 3,130–3,150 yuan per ton. In the spot steel market, on the supply side, due to varying profit margins across different product categories, steel mills have shifted from strong to weaker capacity release, resulting in a slight decrease in molten iron production, while output of specific products has shown mixed performance. On the demand side, as the traditional off-season effect deepens, terminal demand remains limited, and market transactions have been uneven. On the cost side, although iron ore prices have fluctuated slightly, scrap steel prices have remained stable but declined slightly, and coking coal prices have stayed steady, weakening the support for production costs. Therefore, the Lange Steel Research Center forecasts that, under the influence of ongoing economic structural adjustments, limited demand release during the off-season, a shift from strong to weak supply, uneven market transactions, and weakening cost support, the domestic steel market this week is likely to experience volatile but generally stronger trends.

Tang and Song: This week, overall demand in the steel market remained stable but slightly weak. In northern regions, seasonal factors led to a further decline in demand. Meanwhile, some construction sites in southern regions are still rushing to complete projects, maintaining relatively resilient demand and providing some support to the overall market. Despite this, the seasonal differentiation in demand remains pronounced, and the overall growth momentum of demand remains insufficient. On the supply side, supply has been trending toward stable, narrow-range adjustments. Recently, steel prices have risen slightly, and the extent of losses for steel companies has narrowed somewhat, though they still remain in a state of slight loss. Against this backdrop, blast furnace operations have generally stayed stable, while independent electric arc furnaces, facing profit losses, continue to keep rebar production at low levels. It is expected that supply will remain stable this week, with little likelihood of significant fluctuations. In terms of inventory, amid weak yet stable supply and demand, inventories continue to be slowly digested. We anticipate that inventories will continue to decline slightly this week. Regarding costs, although raw material prices have experienced some volatility recently, they generally remain at relatively high levels, providing certain cost support for steel prices. At the macro level, November typically marks the peak season for manufacturing production; the PMI is expected to rise month-on-month, with an anticipated value of 49.6%, up 0.6% from the previous month. As the December economic work conference approaches, macroeconomic expectations are gradually strengthening, bolstering market confidence. Overall, this week, the steel market is characterized by seasonal weakening on the demand side coupled with resilient demand in the south, stable and narrow-range adjustments on the supply side, continued slight declines in inventories, and high-cost support. With macroeconomic expectations steadily improving, market confidence is receiving some support. Overall, the market is likely to show a volatile yet relatively firm trading pattern. For rebar futures, pay attention to the resistance level around 3140 above and the support level near 3070 below.

Han Weidong, Youfa Group: For two consecutive months, steel prices have been fluctuating within a very narrow range. In November, demand increased month-on-month, yet continued to decline year-on-year. Currently, the price of strip steel in Tangshan is hovering around the average level for the entire year and offers no speculative value. Given that fixed-asset investment has declined for five consecutive months, we can expect steel demand to keep falling year-on-year in the first half of next year. Meanwhile, the supply-and-demand turning points for iron ore and coking coal have emerged over the long term, driving costs downward. Therefore, it’s highly likely that steel prices in the first half of next year will be lower than those in the first half of this year. Consequently, stockpiling ahead of this year’s Spring Festival is not advisable. Going forward, business operations will become remarkably straightforward: focus on matching output with sales, ensure profitability in each period, and maintain steady, prudent management! Should prices rise later on, we must guard against risks; and if prices fall, we shouldn’t chase bargains. The market’s equilibrium isn’t determined by price fluctuations alone—it’s reflected in large-scale, sustained production cuts by steel mills. Next year marks the first year when overall steel demand begins to turn downward. We must plan ahead, swiftly transform our business model, and successfully navigate this critical transition!