Experts say city—May 18

My Steel: On the supply side, last week’s total output of the five major steel products reached 8.4024 million tonnes, up 4,100 tonnes, or 0.05%, from the previous week. With the exception of medium‑thick plates and rebar, which saw slight increases, all other product categories posted week‑on‑week declines, largely because steel mills, despite still decent profit margins, have kept production relatively stable, with little change in output levels. In terms of inventories, the combined stock of the five major steel products stood at 15.7529 million tonnes, down 712,900 tonnes, or 4.3%, from the prior week. Stocks of all five product categories declined week over week: mill inventories fell, with wire rod accounting for the bulk of the reduction; social‑sector inventories also dropped, again driven primarily by wire rod. On the demand front, weekly consumption of the five major steel products totaled 9.1153 million tonnes, up 8.4% from the previous week. Within this, construction‑related steel consumption rose 19.7% week over week, while sheet‑metal consumption increased 2.6%. Apparent consumption across the five major product lines thus showed a dual uptick in both construction‑related and sheet‑metal segments. While supply of finished steel edged higher last week, inventories continued to decline, with the pace of destocking accelerating and apparent demand rebounding on a week‑over‑week basis. Overall, the underlying fundamentals of the steel market do not reveal any pronounced contradictions. Looking ahead, on the supply side, according to Mysteel’s survey of steel mill production schedules, there are expectations that steel output will begin to recover in the near term. On the demand side, as the plum‑rain season approaches in mid‑to‑late May, construction‑related demand is likely to ease gradually, while hot‑rolled coil demand may remain relatively steady. Short‑term inventory pressures are expected to remain mild, and the seasonal trend of destocking should persist—though the rate of reduction may slow somewhat. Regarding raw materials, the third round of coking‑coal price hikes has been implemented, and coking plants are considering a fourth increase; however, securing such a hike could prove challenging, leaving overall support from raw‑material prices only moderate. All things considered, the market’s fundamentals remain broadly balanced, with no acute imbalances, though pressure is steadily building. With valuations on the futures market generally elevated, steel prices are expected to trade in a range‑bound pattern in the short term.

Steel Home: Last week, domestic steel prices mostly edged higher. The key factors currently shaping the market are as follows: First, cost support remains robust—iron ore prices have been trading at elevated levels, and the third round of coking coal price hikes has taken effect, pushing the center of gravity for raw material costs upward; mainstream steelmakers such as Baosteel, Ansteel, and Shougang have broadly raised their steel selling prices. Second, supply-side increases remain manageable. Although crude steel output at major steel producers rebounded month-on-month in the first ten days of May, year-to-date daily output has consistently lagged behind the same period last year; recent surveys by SteelHome show blast furnace and electric arc furnace utilization rates fluctuating slightly without further recovery. Third, demand is generally weakening. Trading was brisk at the start of the week, but as restocking demand waned, activity slowed in the latter half; judging from the downward trend in inventories, supply and demand are broadly balanced, though attention should be paid to the impact of the rainy season on outdoor construction in certain regions. Fourth, monetary conditions are beginning to exert an influence. Both CPI and PPI rose in April, with the PPI increase widening; coupled with black‑metal prices still near a decade‑low, this provides some support for pricing. Fifth, market sentiment remains cautious. Following the short‑term price rally, profit‑taking in black‑metal futures and cash‑out sales in the spot market have introduced some volatility into the market. Overall, domestic steel prices are expected to move within a narrow range this week.

Lange: Supply Side: Affected by profit‑and‑loss dynamics across steel grades, steel mills have shifted from a subdued to a more vigorous ramp-up in capacity, leading to a slight increase in hot metal output, while production trends across individual grades have been mixed. Demand Side: Seasonal weather patterns, compounded by the El Niño effect, have brought high temperatures to northern regions and expanded rainy conditions in the south, resulting in a broad-based decline in market transactions. Cost Side: With iron ore prices experiencing mild fluctuations, scrap steel prices edging up, and coking coal prices also rising slightly, production costs have remained resilient. Accordingly, Lange Steel Intelligence forecasts that, amid rising global stagflation risks, persistently elevated energy prices, a gradual easing of China–U.S. economic and trade tensions, a weak domestic economic recovery, steady yet structurally optimized credit expansion, a shift from weak to stronger supply releases, a marked drop in market activity, and continued cost‑support resilience, the domestic steel market is likely to trend lower with volatility this week.

Tang and Song Dynasties: This week, the domestic steel market is expected to trade in a volatile, corrective range, characterized by “supply peaking at high levels, marginal weakening of demand, a deceleration in inventory drawdowns, and waning cost support.” Plate products are seeing relatively balanced supply and demand, with resilient demand remaining; construction‑steel, weighed down by seasonality, may be approaching a peak before retreating, as off‑season conditions continue to cap prices. Compared with last week, fundamental drivers have weakened, and amid cooling bullish sentiment, the overall market is likely to remain choppy. Caution is warranted regarding slowing downstream demand and persistent high‑level supply pressures; downside room for steel prices is limited, while upside faces headwinds. Technically, key support on the rebar futures front lies around 3,200, with resistance near 3,280. Supply outlook: Long‑process steelmakers are still posting decent margins, keeping production enthusiasm robust; blast‑furnace utilization rates are already at relatively high levels seen in recent years, leaving little room for further increases. Consequently, supply is expected to have largely peaked, with only minor adjustments at elevated levels. Output of hot‑rolled and cold‑rolled sheet remains steady, while independent electric‑arc furnace operators, constrained by short‑process costs and scrap availability, may see slight fluctuations in capacity utilization, leading to corresponding adjustments in rebar production. Overall, incremental supply growth is limited, and high‑level operation is likely to persist. Demand outlook: Following a sharp rebound in apparent demand last week, this week may see some pullback, with end‑user purchases dominated by essential needs and speculative demand moderating. Widespread heavy rainfall in southern China will continue to disrupt outdoor construction, pushing rebar demand into a peak‑to‑plateau phase before marginally weakening, with limited room for further gains. Plate‑type demand, supported by manufacturing activity, should remain relatively stable, though overall rigid steel demand may ease compared with last week. The hallmarks of an approaching off‑season are gradually becoming evident. Inventory expectations: With demand weakening marginally and supply remaining at elevated levels, the overall pace of steel inventory destocking is set to slow. Construction‑steel inventories, affected by rain and seasonal demand softening, are seeing slower terminal purchases and a narrowing of destocking momentum; plate‑type inventories may continue to decline, but the rate of reduction could moderate slightly. This week’s key watch points include: geopolitical developments in the Middle East and shipping dynamics; April fixed‑asset investment and real‑estate data; the May LPR quote; the initiation and implementation of the fourth round of coking‑coal price hikes; steel export order intake; Fed officials’ comments and expectations of rate cuts; the sustainability of underlying end‑user demand; progress in issuing special‑purpose bonds; and volatility in energy and maritime freight rates. Risks to monitor: Recurring Middle East geopolitical tensions; potential delays in implementing the fourth round of coking‑coal price hikes; weaker‑than‑expected April macroeconomic data; marginal declines in steel exports; sharp swings in energy prices; and the early emergence of pronounced off‑season characteristics.

Han Weidong: President Trump’s visit to China marks the entry of U.S.–China relations into a new phase. The next critical focus of Middle East conflicts will center on ensuring safe navigation through the Strait of Hormuz. With the appointment of a new Federal Reserve chair, a new era for the U.S. dollar has begun. Fluctuations in steel prices are shifting from expectations to reality; the May contract for rebar now reflects genuine market sentiment. Amid recent price increases, many companies have sought to swiftly reduce excess inventories, but this has proven difficult to achieve in practice. The traders remaining in the market have stood the test of time. If no one is rushing to snap up steel at 3,100, why would they scramble for prices above 3,300? Prudent management and purchasing based on actual demand remain the right strategy for the foreseeable future.