Experts say city—June 22

My Steel: On the supply side, last week’s output of the five major steel products totaled 8.6802 million tonnes, up 109,700 tonnes from the previous week, a 1.3% increase. With steel margins remaining reasonably strong, production continued to rise, further intensifying supply pressures. Meanwhile, total inventories of the five major steel products stood at 15.5702 million tonnes, down 32,000 tonnes week-on-week, a 0.2% decline. The shift from rising to falling aggregate inventories signals that the current buildup of steel stocks lacks a solid foundation. In addition, inventory dynamics show structural divergence: factory‑level stocks continue to accumulate, reflecting mounting production pressure, while declining social‑sector inventories have helped drive the overall decline. On the demand side, last week’s apparent consumption of the five major steel products reached 8.7122 million tonnes, up 3.1% from the prior week—with construction‑related consumption rising 5.1% and sheet‑metal consumption increasing 2.0%. As the impact of the recent college entrance exams subsided, short‑term demand staged a restorative rebound, preventing a sustained build‑up in inventories. Overall, both supply and demand for the five major steel products expanded last week, while aggregate inventories reversed their upward trend and began to decline, suggesting a broadly neutral yet slightly bullish underlying market outlook. From a supply perspective, steel mills are still posting decent profits and remain well above the loss threshold, making it unlikely that supply pressures will ease significantly in the near term. On the demand front, with the off‑season approaching and heavy monsoon rains battering much of southern China—compounded by this week’s middle‑school entrance exams—there is insufficient momentum for a sustained recovery, leaving downside risks intact. In sum, the market appears to be nearing a turning point where the cumulative inventory build-up may begin to reverse; under the backdrop of the off‑season, inventory pressures could continue to mount. However, given the absence of any coordinated production cuts in the short term and the persistence of cost‑support factors, prices are expected to remain relatively weak in the near term, though downside room may be limited.

Steel Home: Last week, domestic steel prices continued to trend downward, with weak supply and demand remaining the primary factors weighing on prices, while the cost‑supporting effect of rising coal and coking‑coal prices was limited. First, steel output has followed a seasonal decline, with overall mill production remaining stable. Second, key economic indicators were lackluster: investment fell at a faster pace in May, consumption shifted from growth to contraction, and industrial production expanded at a slower rate, reflecting insufficient demand momentum. Third, early onset of heavy rainfall across more regions intensified the impact of the traditional off‑season, leading to sluggish inventory destocking. On the positive side, coal and coking‑coal prices have surged recently; since the May 22 mine accident, coke prices have risen in four rounds, with an eighth round taking effect this week. However, persistently lower iron‑ore prices have offset much of this upward pressure, limiting the overall cost‑push effect. Meanwhile, falling steel prices combined with rising coal and coking‑coal costs have squeezed mill margins, bolstering their willingness to defend prices. Overall, domestic steel prices are expected to remain volatile and tilted to the downside this week.

Lange: Supply Side: Affected by profit‑and‑loss dynamics across steel grades, the pace of capacity release has shifted from strong to moderate, leading to a slight decline in hot metal output while output of specific steel grades has increased. Demand Side: Despite widespread rainfall, pre‑Dragon Boat Festival restocking demand has edged up, driving a corresponding rebound in market transactions. Cost Side: With iron ore prices edging lower, scrap steel prices remaining stable, and coking coal prices registering a modest increase, production costs have held firm. Accordingly, Lange Steel Intelligence forecasts that, amid the conclusion of “Super Central Bank Week,” a temporary easing of geopolitical tensions, pronounced domestic economic divergence, resilient industrial exports, sluggish recovery in real estate and consumer spending, a shift from robust to moderating supply releases, a phased pick-up in market activity, and sustained cost support, China’s steel market is likely to remain weak this week.

Tang and Song Dynasties: This week, the domestic steel market is expected to trade in a volatile, slightly weaker range, characterized by “expectations of supply contraction, the deepening of the off-season for demand, continued inventory build-up, and weakening cost‑support expectations.” On the supply side, output remains at relatively high levels, but steel margins have been sharply squeezed, raising prospects of a supply pullback. Heavy rainfall in southern China and hot, wet weather in the north are intensifying the off-season effect, further increasing inventory‑accumulation pressures. Meanwhile, with the Federal Reserve holding interest rates steady, substantive progress in U.S.–Iran talks, and a decline in geopolitical risk premiums, crude oil and other commodities are under pressure, weakening cost‑support for black‑steel products and leaving the market short of upward momentum. Overall, with both supply and demand fundamentals weakening and cost‑support expectations fading, prices are likely to remain volatile and tilted to the downside. For rebar futures, key support lies around 3,100–3,120, while resistance is seen near 3,190. Supply Outlook: With the seventh round of coking coal price hikes now in effect, steel production costs have risen further, dampening steelmakers’ willingness to increase output; blast furnace operating rates in the long-process sector may see a slight decline. Meanwhile, independent electric‑arc furnace lines, weighed down by tight power supplies during the peak summer demand period and persistent production losses, are likely to keep rebar output at low levels. Overall steel supply is expected to weaken marginally, reinforcing expectations of a contraction on the supply side. Demand Outlook: Prolonged heavy rainfall in southern China and hot, rainy conditions in the north, coupled with the Dragon Boat Festival holiday, are deepening the off-season effect, hindering construction progress and pushing demand for construction steel lower. Manufacturing demand remains relatively stable, but speculative trading activity is unlikely to pick up, leading to a modest slowdown in overall demand release and a subdued market sentiment. Inventory Expectations: With supply still at relatively high levels and the off-season impact intensifying—exacerbated by the Dragon Boat holiday—inventory accumulation pressures are mounting. This Week’s Key Focus: LPR rate announcements, real estate sales data for late June, and the pace of special‑purpose bond issuance; as well as the Federal Reserve’s meeting minutes, June PMI figures, U.S. steel import data, and updates to the list of tariff exemptions. Industry Highlights: The implementation of the eighth round of coking coal price hikes, changes in inventory levels, and steelmakers’ blast furnace maintenance schedules. Risks to Watch: Coal mine resumption driving down coking coal prices; uncertainty over whether the latest coking coal price hike will be fully passed on; accelerating inventory build‑ups in finished‑steel products; and the Fed’s continued high interest rates putting pressure on commodities.

Zhuochuang Information: Steel prices are expected to trend weaker this week. The analysis points to the following factors: First, amid the traditional off-season, end‑user demand remains sluggish, making it difficult for the market to improve in the short term; bullish and bearish forces are both subdued at low levels, constraining price movements. Second, raw material billet prices may fluctuate and decline, weakening cost‑based support for steel prices. However, coking coal prices remain relatively firm, with the eighth round of price hikes already implemented, so cost pressures continue to provide a floor and limit further downside. Third, market sentiment remains cautious and predominantly pessimistic; according to a survey by Mysteel, this week’s steel confidence index stands at 33.65, down 2.84 from the previous period, reflecting waning confidence and a prevailing bearish outlook. Sellers are focused on active inventory clearance, which provides insufficient support for prices.

Han Weidong: With the U.S.–Iran agreement and the new Federal Reserve chair’s remarks now behind us, two major market‑disrupting uncertainties have been resolved, allowing the market to resume its own logic and pace. The sharp, one‑sided plunge in the Wenhua Commodity Index, driven by falling crude oil prices, has also come to an end; among black‑steel products, iron ore—previously trading at elevated valuations—has retreated to a more reasonable level below 100, bringing the market back to fundamentals. Volatility in steel‑making costs will likely be minimal, leaving price upside largely confined to the modest profit margins of around 100 yuan per ton for steelmakers. Over the past five years, second‑half steel demand has consistently lagged significantly behind the first half, and this year is no exception—especially given that fixed‑asset investment has declined for two consecutive months, further confirming this cyclical pattern. For steel producers, the only viable course is production cuts; there are no better alternatives. Meanwhile, the prudent strategy for steel traders is to align output with sales and pursue steady, conservative operations. After prices hit bottom in the second half of last year, it took nearly six months for them to rebound by just over 100 yuan—a painfully long wait, with speculative returns too low to justify rushing in to catch the dip.

Zhang Guangzhi, Deputy General Manager of Marketing at Youfa Group: 1. External uncertainties remain highly volatile, with the interplay of U.S.–Iran–Israel dynamics and the reopening of the Strait of Hormuz—coupled with U.S. interest-rate hikes—creating substantial downside risks for market prospects. The July Politburo meeting on economic analysis will provide further clarity on adjustments to fiscal, monetary, and regulatory policies, but for now, macroeconomic conditions remain uncertain, as does the outlook for steel prices in the second half of the year. That said, the current seasonal lull in demand, a pullback in coking‑coal costs, and persistently high hot‑metal output are all well‑established factors; at the same time, the implementation of the dual‑carbon policy is equally certain—implying short‑term headwinds but long‑term tailwinds.

2. From an industry perspective, steel mills’ profit margins remain above 50%, and pig iron output (2.4224 million tons) remains at a high level. Although weekly demand has rebounded, the sustainability of this seasonal recovery still requires further verification.

3. From a cost‑calculation perspective, the prices of rebar and hot‑rolled coil under the 2610 contract have already fallen to the cost level. Unless iron ore and coking coal continue to decline—though iron ore is unlikely to fall much further—the short‑term price action will largely track changes in production costs, with relatively modest swings. Whether the external environment stabilizes quickly, whether cost support remains robust, and whether domestic supply and demand can rebalance swiftly during the off‑peak season will all determine the subsequent trend. As for whether the second half of the year marks the start of a major upward cycle or remains confined to a choppy trading range, this will need to be reassessed in light of broader macroeconomic developments. In terms of trading, proceed with caution and avoid rushing into positions.