Experts say city—July 13

My Steel: On the supply side, last week’s total output of the five major steel product categories reached 8.4703 million tonnes, down 171,300 tonnes from the previous week. This period saw a divergence in the production mix: construction‑steel output declined, while flat‑steel output posted a modest rebound. Total inventories of the five major steel products stood at 16.3392 million tonnes, up 108,700 tonnes week on week, a 0.7% increase. Overall, inventories of the five major product categories rose, with contrasting trends between construction and flat steels: construction‑steel stocks increased by 120,800 tonnes, while flat‑steel inventories fell by 12,100 tonnes. On the demand side, weekly consumption of the five major steel products totaled 8.3616 million tonnes. Construction‑steel consumption dropped 5.4% week on week, whereas flat‑steel consumption edged up 1.8%. Among the five major product categories, demand patterns diverged, with construction steel and flat steel showing opposite trends. Currently, both rebar and hot‑rolled coil are entering the off‑season. For rebar, amid declining supply and demand, apparent consumption has fallen more sharply than production, leading to continued inventory build‑ups—albeit at an accelerating pace compared with the prior week—and a year‑on‑year increase in stockpiles as well. Looking ahead, under a backdrop of rising supply and weakening demand, the rate of inventory accumulation is expected to keep expanding. As for hot‑rolled coil, on the supply front, following the resumption of production at North China mills, output is gradually picking up, but overall room for further recovery remains limited. With profit margins now squeezed to near zero per tonne, steelmakers’ enthusiasm for restarting capacity is likely to be dampened. In the short term, supply pressures on hot‑rolled coil will probably remain subdued, with any imbalances continuing to accumulate slowly.

Steel Home: Last week, domestic steel prices fluctuated and remained generally firm, with trading volumes remaining moderate and steel inventories continuing to rise slightly. The key factors currently shaping the market are as follows: First, based on current cost calculations, steel mills are already operating at a loss, prompting some companies to cut or cap production and increasing the frequency of maintenance shutdowns. Second, steel prices are now largely at bottom‑range levels; coupled with relatively high inventory costs for traders, there is limited room for further declines. Third, inventories of the five major steel product categories have risen for four consecutive weeks, and with recent increases in high temperatures and heavy rainfall, downward pressure on stockpiles is mounting. Fourth, iron ore prices show signs of having bottomed out, while coking coal prices have faced resistance in their tenth round of increases but remain at elevated levels, providing strong support for steel prices. Overall, domestic steel prices are expected to maintain a volatile yet firm trend this week. Key areas of focus include changes in steel inventories, developments in mill production cuts and maintenance schedules, and the impact of heavy rainfall on demand.

Lange: Under the combined influence of insufficient momentum in the global economic recovery, escalating geopolitical tensions, structural improvements in domestic economies, central banks’ continued accommodative policies, a shift from weak to stronger supply-side dynamics, rising market turnover, and resilient cost support, China’s steel market is expected to experience volatile and divergent trends this week.

Tang and Song Dynasties: This week, major steel markets are expected to trade in a narrow range; imported iron ore prices are likely to remain volatile at low levels, while coking coal spot prices are holding firm at elevated levels. With growing market expectations of production cuts, the peak‑summer off‑season is weighing on end‑user demand, and inventories continue to face modest upward pressure. Anticipated output restrictions in Tangshan and the upcoming Politburo meeting later this month are providing supportive underpinnings, helping to stabilize steel prices at lower levels. However, weak demand during the traditionally slow season is unlikely to improve, keeping the market locked in a tug‑of‑war between bullish and bearish forces, with steel prices undergoing choppy adjustments. For rebar futures, watch for support around 3,070 and resistance near 3,130. Supply Outlook: Steel mill profits remain weak, curbing production enthusiasm. In mid-July, a growing number of blast furnaces are scheduled for maintenance, while expectations of stricter environmental‑related production cuts in Tangshan are intensifying, suggesting that supply will continue to contract. Demand Outlook: On the demand side, many regions across China have entered the peak flood season, with persistent heavy rainfall and rising temperatures, highlighting pronounced off‑season trends. These conditions are weighing on outdoor construction activities, keeping steel demand persistently sluggish. Inventory Outlook: While supply is expected to tighten, the combination of the hot, rainy season and slower end‑user construction activity will keep demand weak. Under this dual‑weak supply‑and‑demand dynamic, inventory build‑up pressure remains manageable, with a modest accumulation trend likely to persist. This Week’s Key Focus: China’s first‑half GDP, June industrial value added, fixed‑asset investment and real‑estate data, as well as June social financing and credit figures; in the U.S., June CPI, U.S.–Iran tensions, and the EU’s new steel import quota regulations. Industry Highlights: Closely monitor developments in Tangshan’s environmental controls, blast furnace maintenance schedules, molten iron output, and finished‑steel inventory changes. Risks to Watch: Weak real‑estate and credit data; continued inventory buildup during the off‑season; U.S. inflation exceeding expectations; and implementation of Tangshan’s production cuts falling short of market expectations—any of which could derail growth‑supporting policies.

Zhuochuang Information: Steel prices are expected to trend lower this week, with adjustments likely to be muted. The underlying reasons are as follows: On the one hand, the traditional off-season continues to weigh on demand, keeping overall end‑user activity subdued; the dual weakness in supply and demand remains difficult to reverse, and this weak fundamentals continue to cap price gains. On the other hand, as futures have moved higher amid volatile but generally firm trading, bearish sentiment has eased compared with earlier periods, and market confidence has improved from last week. According to a survey by Zhuochuang Information, this week’s steel confidence index stands at 43.68, up 9.86 percentage points from the previous reading. Coupled with current steel margins that remain in loss territory, producers’ willingness to hold prices has strengthened, providing some support to underpin the market. Amid ongoing tug‑of‑war between bulls and bears, steel prices are likely to trade in a range, with modest downside pressure.

Han Weidong: After a correction of nearly 200 yuan, the current market situation is as follows: Prices have already fallen to winter‑storage levels, hovering near the average range of recent fluctuations, putting them firmly in “cheap” territory with limited downside risk. They’re now less than RMB 100 above the lows of the past two years. Steel mills are reporting widespread losses, and a trend toward production cuts is emerging. Although total steel inventories are still edging higher, the pace of growth has slowed—and in some cases even reversed—suggesting a potential decline. With patience, we can wait for further output reductions at the mills and for inventory trends to turn from rising to falling; once both conditions are met, all that will be missing is the final push. Let’s hope this month’s end‑of‑month meeting signals a move to curb excessive competition.

Zhang Guangzhi, Deputy General Manager of Marketing at Youfa Group: 1. Recently, the U.S.-Iran situation has been evolving rapidly. Although the market has largely priced in these developments, the impact of external uncertainties on risk appetite and commodity sentiment still warrants close monitoring. On the macro front, economic data for this month are expected to be broadly stable, with a slight downside bias; the key policy‑rate‑repricing window may emerge at the end of the month, following an important meeting. Should the data fall short of expectations, policymakers could further ramp up measures aimed at stabilizing growth and bolstering market confidence. Meanwhile, Typhoon “Bavi” continues to exert a temporary drag on demand and logistics in certain regions, though its effects are expected to gradually abate before month‑end. The disbursement of central disaster‑relief funds should also help stabilize post‑disaster recovery efforts and support market sentiment.

2. On the fundamentals front, both rebar output and hot metal production have shown marginal declines, easing supply-side pressures. However, the recovery in end‑user demand remains sluggish, and sustained upward momentum has yet to materialize. Consequently, steel prices are currently caught in a tug-of-war between cost support and a weak demand recovery. Should hot metal output fall further, the raw materials side could face some negative feedback; nonetheless, with steel mills’ margins, inventory dynamics, and policy expectations all at play, such negative effects are likely to manifest as temporary disruptions, leaving the risk of a sharp pullback relatively limited.

3. Considering changes in overall costs, the pace of demand recovery, and policy expectations, the short-term support for the rebar 2610 contract is likely to remain around 3,050, while upward pressure will persist near 3,120 in the absence of clear additional demand. We expect the market to largely trade within a 3,050–3,120 range through the end of July, with hot-rolled steel trends broadly mirroring those of rebar. Looking ahead to the second half of the year, given that demand elasticity has yet to show significant improvement, steel prices are more likely to experience a moderate rebound rather than a sustained uptrend, with any interim rally expected to be limited to 100–150 points. Going forward, close attention should be paid to the strength of policy implementation, the pace of production adjustments, and the evolution of end‑user demand, with price‑range forecasts adjusted accordingly.