Experts say city—April 6

My Steel: On the supply side, output of the five major steel products increased last week, with steelmakers enjoying reasonable profit margins. Coupled with warming temperatures in northern China that have boosted demand, capacity utilization at steel mills has risen further, suggesting that supply of the five major steel products still has room to recover going forward. On the demand side, apparent weekly consumption rose week-on-week last week, with hot-rolled coil seeing a stronger rebound than rebar. The recovery in actual demand, combined with improving market sentiment, has accelerated destocking at both mill and social inventories. Overall, the steel supply-and-demand balance is characterized by simultaneous increases on both the supply and demand sides, with no particularly acute imbalances. Market attention should now focus on the strength of peak-season demand going forward; meanwhile, geopolitical factors continue to drive volatile market sentiment, suggesting that steel prices are likely to remain highly volatile in the near term.

Steel Home: Last week, domestic steel prices saw modest adjustments, with trading activity remaining moderate and inventory continuing to decline. Market momentum for price increases or decreases was weak, driven primarily by three key factors: First, raw material and fuel prices for steel exhibited mixed movements, resulting in overall stable costs; the first round of coking coal price hikes took effect at the beginning of the month, while alloy prices such as ferrosilicon and silicomanganese remained robust, yet iron ore prices softened, weakening cost support. Second, the U.S.–Israel–Iran conflict is unlikely to ease in the short term, pushing up crude oil and shipping rates and increasing uncertainty, which has made traders cautious about the outlook. Third, inventory continues to decline, bringing supply and demand into near balance. On the downside, trading recovery has slowed, with volumes falling for some product grades; blast furnace and electric arc furnace operating rates have continued to inch higher, but recent heavy rainfall in southern China has further dampened demand. We expect domestic steel prices to remain largely unchanged this week, with only minor adjustments.

Lange: Overall, last week the steel market was largely weighed down by weakening cost pressures; however, the welded and galvanized pipe segment itself faced only modest supply-side constraints, as upstream mills have temporarily slowed the pace of production resumption, preventing a rapid transmission of supply pressure. Supported by the gradual recovery in rigid demand, producers have been relatively flexible in adjusting prices. In addition, as the futures contract roll-over nears completion late in the week—with the October contract trading slightly higher—the downward pressure on finished-product prices has also eased more quickly. During the holiday period, most producers will adjust their operating schedules based on shipment volumes, with 1–3 days of shutdowns or even mill maintenance; accordingly, domestic prices for welded and galvanized pipes are expected to trade in a range-bound, transitional mode throughout the break. That said, post-holiday consumption of contracted raw materials is likely to intensify, and given the current window of tug-of-war between spot and futures markets, the prevailing market dynamic—characterized by stable-to-weak pricing, flexible shipping strategies, and continued efforts to destock inventory—is unlikely to change.

Tang and Song dynasties:   This week marks a critical window for validating peak-season demand in the “Silver Fourth” period, with supply marginally picking up but limited in magnitude, seasonal demand recovery entering the realization phase, and inventory continuing to decline though remaining at relatively high absolute levels. Cost support is weakening at the margin, yet a floor remains in place; coupled with the easing of geopolitical tensions in the Middle East and the gradual unwinding of the energy premium, steel prices are likely to remain volatile and weakly adjusted, with insufficient momentum for a sustained upward trend. On the supply side: blast-furnace utilization in long-process mills stays at elevated levels, with hot-metal output continuing to recover but at a decelerating pace. Plate production—particularly coil and strip—remains stable at high levels, with markedly narrowed room for further increases; in rebar, independent electric-arc furnaces in southern China are mostly operating at the breakeven point, limiting production enthusiasm, while short-process mills maintain steady operations with only minor fluctuations in output. Overall, plate markets are stabilizing at high levels, while construction-materials markets lack elasticity, leaving limited scope for substantial output expansion. On the demand side: this week is a pivotal period for verifying “Silver Fourth” demand. With construction projects resuming fully across both northern and southern regions and improving weather conditions, national rebar demand is expected to rebound seasonally; however, weak new real-estate starts continue to cap the extent of the recovery. Processing and manufacturing firms are operating normally, sustaining resilient demand for plate and strip products; meanwhile, rigid demand from emerging overseas markets persists, keeping export volumes steady. While there is still room for a peak-season recovery, its strength remains to be seen; actual demand is clearly weighed down by the property sector, and although the seasonal uptrend is clear, its magnitude may fall short of expectations, thereby weakening price support at the margin. In terms of inventory: total steel stocks continue their downward trajectory, with major product categories steadily reducing inventories and supply–demand dynamics improving marginally. Construction materials benefit from the ongoing peak construction season, maintaining the downward trend; however, in mainstream markets such as Hangzhou, the pace of destocking remains relatively slow, with localized pressure persisting. The inventory mix for plate products continues to improve, with robust demand from the manufacturing sector supporting inventory digestion. Although current absolute inventory levels remain seasonally high, the marginal trend of destocking is clear. On the cost front: with the easing of Middle Eastern tensions, geopolitical risk premiums are gradually receding, energy market sentiment is cooling, and crude-oil and coal prices have retreated from their recent highs, putting domestic raw-material prices under downward pressure. A second round of price hikes by coking-plant operators is likely to face resistance from steelmakers, making it difficult to implement. At present, steelmakers’ production-restart efforts are progressing steadily, with hot-metal output continuing to rise; combined with the release of pent-up restocking demand, short-term iron-ore demand does receive some support. However, iron-ore valuations remain elevated and steelmakers’ margins are thin, limiting upside potential. Overall, cost support is weakening at the margin, though a floor remains in place, resulting in insufficient impetus for price increases. On the macro level: this week will see a flurry of key macroeconomic events: on the evening of April 3, U.S. March nonfarm payrolls data will be released, directly impacting global liquidity and commodity pricing; domestically, at 9:30 a.m. on April 10, March CPI and PPI figures will be published, with the recovery of domestic demand and the degree of inflation being the market’s primary focus, which will in turn shape monetary-policy expectations. From a product-specific perspective, vigilance is required regarding the risk of a post‑geopolitical‑easing pullback in costs, particularly for coking coal, which has seen significant gains earlier—downside pressure on this commodity is especially pronounced. We expect the domestic steel market to trade in a volatile, weakly trending range this week. Weak cost support and weaker-than-expected demand realization exert dual downward pressure, while constrained supply growth and continued inventory destocking provide temporary support. The Middle-East situation remains the core variable, and investors should remain alert to volatility triggered by shifts in market sentiment. Technically, key support for rebar futures lies around 3,070, with resistance concentrated near 3,130.

Han Weidong: Since the beginning of April, steel mills have been gradually ramping up production. Based on data released by various steel trading hubs, daily crude steel output has now reached around 3 million tonnes—yet China’s annual average daily output cap for this year must remain below 2.8 million tonnes. No matter how strong market demand may be, it simply cannot absorb current production levels. Over the past several years, whenever daily crude steel output has exceeded 3 million tonnes for a sustained period—typically within three months—a subsequent market downturn and production cuts have invariably followed, without exception. Looking ahead, the only viable path is production reduction: either through market-driven pressure on mills to cut output, or via policy measures aimed at curbing excessive competition and overcapacity. Without such reductions, as the peak season winds down, the supply-demand imbalance will only deepen, manifesting in rising total steel inventories after an initial decline. This year, the biggest positive factor for the market is low steel prices, leaving limited room for further declines; the greatest hope lies in supply-side reforms designed to curb unhealthy competition, while the greatest risk stems from the systemic fallout of a Middle East conflict. The sharp surge in crude oil, natural gas, and chemical prices is, after all, only temporary; its duration will determine the extent of its negative impact on the economy, and any eventual return to normal price levels will inevitably trigger systemic risks. From an operational standpoint, the key strategy is prudent management: before the off-season sets in, mills should reduce excess inventory.