Experts say city—June 15

My Steel: On the supply side, last week’s total output of the five major steel products reached 8.5705 million tonnes, up 45,500 tonnes from the previous week, a 0.5% increase. With the exception of wire rod and medium‑thick plates, which saw declines, the other product categories all posted week‑on‑week gains, driven primarily by reasonable profit margins at steel mills and some plants ramping up production. In terms of inventories, the combined stock of the five major steel products stood at 15.6022 million tonnes, up 120,500 tonnes week over week, a 0.78% rise. All five product categories recorded week‑on‑week increases: mill inventories rose, with rebar accounting for the bulk of the growth; social‑sector inventories also climbed, led by hot‑rolled coil. On the demand front, weekly consumption of the five major steel products totaled 8.45 million tonnes, down 0.4% from the prior week. Within this, construction‑related steel use fell 1.8% week over week, while sheet‑metal consumption edged up 0.3%. Overall, apparent consumption showed a pattern of declining construction‑related steel and rising sheet‑metal demand. Last week, both supply and demand for the five major steel products contracted, while inventories accumulated slightly. Taken together, the structural imbalance between supply and demand is gradually building. On the supply side, the impact of the environmental inspection campaign that began in May has largely dissipated, and steel mills are still enjoying decent profit margins, suggesting that output will likely continue to rebound. On the demand side, judging from capital allocation, the share of funds available for project financing has been falling rapidly. As of last weekend, special-purpose bonds issued in June amounted to RMB 43.7 billion, with no land‑reserve bonds yet released. Excluding these two components, the proportion of newly issued special‑purpose bonds that can be used for infrastructure projects stands at 60%, a level that remains relatively low compared with the past two years—around the 30th percentile. Slower funding flows, rising temperatures, and the ongoing middle‑school entrance exams are all contributing to a continued slowdown in downstream demand. Turning to raw materials, the sixth round of price hikes for coking coal has taken effect, with further increases expected going forward, lending overall strong support to input costs. Overall, pressure on finished steel prices is steadily mounting: demand is weakening, but cost support persists, leading us to expect steel prices to trade in a volatile range in the near term.

Steel Home: Last week, domestic steel prices generally trended lower amid volatility, with lackluster trading volumes that fell short of the same period last year and muted price‑driving factors. First, the supply‑demand fundamentals remained weak: blast furnace and electric‑arc furnace capacity utilization stayed broadly stable, while heavy rainfall in many regions significantly disrupted outdoor construction, keeping the market characterized by stable supply and subdued demand. Second, steel inventories changed little, but mill inventories reversed their downward trend and began to rise, with some mills reporting disappointing order intake. On the positive side, the coal‑coking market remained robust: coking coal prices have now risen for a sixth consecutive round, and some coking producers are signaling a seventh increase; meanwhile, after a prolonged decline, iron ore prices have seen their rate of fall slow, providing some cost support for steel. Overall, current steel price movements show no demand‑driven upward momentum, while any downside is underpinned by cost factors. We expect domestic steel prices this week to remain volatile, leaning slightly softer.

Lange: Supply Side: Affected by profit‑and‑loss dynamics across steel grades, steel mills have continued to ramp up capacity releases, leading to a modest increase in hot metal output, while production trends across individual grades have been mixed. Demand Side: Owing to the traditional off‑season effect and widespread rainfall, demand at the end‑user level has shown pronounced regional disparities. Cost Side: With iron ore prices fluctuating slightly, scrap steel prices remaining stable, and coking coal prices edging higher, cost support has strengthened further. Accordingly, Lange Steel Intelligence forecasts that, amid global economic headwinds, heightened geopolitical tensions, the European Central Bank’s rate hikes, a moderate domestic economic recovery, stable price and trade performance, continued expansion of supply, uneven demand recovery, and bolstered cost support, China’s steel market this week is likely to experience volatile, predominantly weaker price action.

Tang and Song Dynasties: This week, the domestic steel market is expected to trade in a volatile, corrective range, characterized by “marginal supply contraction, demand under pressure during the off-season, modest inventory build‑up, and cost‑based support.” While supply remains elevated, it is trending toward marginal tightening. Persistent rainfall in southern regions and scorching heat in the north are prolonging the off‑season effect, potentially shifting factory‑warehouse pressures to social inventories. On the macro front, expectations for supportive domestic policy remain, and with the Federal Reserve’s rate‑setting meeting this week and a flurry of domestic economic data due out, market sentiment is cautious; once negative factors have largely played out, sentiment may ease. Overall, underlying supply‑and‑demand dynamics remain weak, but cost‑side support persists, leaving a floor beneath steel prices and keeping prices likely to hover in a choppy, corrective pattern. For rebar futures, key support lies around 3,130, while resistance is seen near 3,190. Supply Outlook: With the seventh round of coking coal price hikes imminent, steel mill margins are tightening rapidly, and during the off-season, producers may shift from adjusting product mixes to cutting output. We expect long-process blast furnace utilization rates to remain elevated but fluctuate, with marginal declines in hot metal production; independent electric arc furnaces continue to operate at a loss, potentially leading to further reductions in operating rates. On the supply side, a structural imbalance—high‑cost long‑process capacity under pressure while electric arc furnaces remain weak—is becoming evident. Although overall supply remains at elevated levels, incremental growth is constrained, easing supply-side pressures marginally. Demand Outlook: From the demand perspective, construction sites are gradually resuming work following the college entrance exam, and with pent-up demand from earlier periods being released, we may see a temporary rebound early this week. However, the ongoing plum‑rain season in southern China and the onset of scorching heat in the north are limiting working conditions, while slower disbursement of funds suggests that, once the short‑term surge subsides, demand will quickly revert to typical off‑season patterns. We anticipate a “rise followed by restraint” trend this week, with overall apparent demand weakening slightly. Inventory Expectations: Downstream buyers remain reluctant to take delivery, ushering in a gradual inventory‑building phase typical of the off-season, with factory‑level stock pressures likely spilling over into social inventories. That said, the current supply‑demand imbalance is not yet acute, so inventories are unlikely to surge sharply; modest increases are expected. This Week’s Key Focuses: China’s May industrial value added, May fixed‑asset investment, and May total retail sales of consumer goods; the Federal Reserve’s June policy decision and dot plot, along with Fed Chair Powell’s press conference; U.S. May retail sales and initial jobless claims for early June. Industry‑Specific Highlights: The implementation of the seventh round of coking coal price hikes; changes in port inventories and shipments of iron ore; and developments in blast furnace utilization rates and hot metal output at steel mills. Risks to Watch: The extent to which steel mill profits deteriorate after the latest coking coal price hike takes effect; the pace at which finished‑steel inventories build up; and any unexpected hawkish signals from the Federal Reserve that could trigger volatility across commodity markets.

Zhuochuang Information: Steel prices are expected to remain weak this week. The underlying reasons are as follows: First, demand is likely to stay subdued, putting downward pressure on prices. High temperatures and frequent rainfall, coupled with the ongoing wheat harvest in some regions, have led end‑users to adopt a just‑in‑time purchasing approach, resulting in generally soft downstream demand and limiting price gains. Second, raw material billets are trading in a volatile, slightly weaker range, weakening cost‑based support for steel prices. Reports indicate that some downstream billet‑rolling mills anticipate production cuts, which could further reduce billet demand and weigh on billet prices. Third, market sentiment remains cautious and predominantly pessimistic. According to a survey by Zhuochuang Information, this week’s steel confidence index stood at 36.49, up 1.63 points from the previous period; however, overall confidence remains inadequate. Market participants are primarily focused on active sales, with limited willingness to defend prices.

Han Weidong: At present, fundamentals show that production remains at a high level, total steel inventories have halted their decline and are even edging up, steel mill margins are normal, demand has exceeded expectations (year-on-year growth), and steel prices are hovering around last year’s average. Market imbalances are not pronounced, and prices are expected to continue trading in a range-bound pattern. The market will remain volatile for an extended period, so patience is essential. Investors should wait for production to decline and for inventories to shift from rising to falling; only when prices reach the lower end of the current trading range should they consider taking action. This week, key attention will be focused on the Federal Reserve Chair’s remarks regarding the future policy trajectory, as well as whether U.S.-Iran relations in the Middle East undergo any dramatic shifts.

Zhang Guangzhi, Deputy General Manager of Marketing at Youfa Group: On the demand side, the plum rains and scorching heat have arrived as expected, and the World Cup is upon us, both of which are clearly weighing on consumption. Meanwhile, pig iron production remains at a high daily output of 240,000 tons, while steel prices themselves lack any upward momentum. Steel futures prices have already fallen to the cost‑plus level; despite several attempts to push lower, each pullback has been followed by a rebound, underscoring a clear support zone. At the same time, coking coal and coke costs continue to rise, driving an involuntary upward adjustment in futures prices. The cumulative inventory data for the five major steel products show that, since early June, inventory has indeed built up as expected—but the increase has been gradual, modest in magnitude, and slow in pace, overall outperforming last year. Following the sixth round of coking‑coal price hikes, at current iron‑ore prices, a rebar production cost of around 3,150 to 3,170 yuan per ton is reasonable. If coking coal were to rise another two rounds, costs would be pushed up by more than 40 yuan per ton. However, weak off‑season demand is capping the upside for steel prices, leaving raw material costs rising faster than steel prices, which in turn compresses mill margins and forces producers to voluntarily curb output. The market finds itself caught between rising and falling pressures; provided supply‑and‑demand channels remain healthy and inventories stay at reasonable, low levels, we recommend replenishing stock on dips. Going forward, market participants should monitor external developments and domestic policy trends before making further adjustments.