Experts say city—July 27

My Steel: On the supply side, last week’s output of the five major steel product categories totaled 8.3743 million tonnes, up 116,100 tonnes from the previous week. The mix of steel grades remained consistent this period, with both construction‑steel and sheet‑steel production posting modest gains. Total inventories across the five major steel products stood at 16.2941 million tonnes, an increase of 133,500 tonnes week over week, or 0.8%. Overall inventories rose, with construction‑steel and sheet‑steel stocks moving in tandem: construction‑steel inventories climbed by 81,500 tonnes, while sheet‑steel inventories increased by 52,000 tonnes. On the demand side, weekly consumption of the five major steel products reached 8.2408 million tonnes. Consumption of construction steel fell 3.8% week over week, and sheet‑steel consumption declined 1.6%. Among the five product categories, the consumption patterns for construction steel and sheet steel remained broadly aligned. Currently, demand for rebar and hot‑rolled coil remains in the off‑season. For rebar, funding availability continues to deteriorate; only 28.6% of special‑purpose bonds can be allocated to project financing, the lowest level in nearly two years, reflecting a challenging financial environment. Coupled with persistently high temperatures and frequent rainfall, these factors have weakened overall demand. We expect rebar production to see a slight uptick this week, further exacerbating the supply‑demand imbalance. As for hot‑rolled coil, with previously shut‑down mills gradually resuming operations, supply is marginally improving; however, profit margins remain near the breakeven point. Consequently, pressure on hot‑rolled coil supply is likely to stay subdued, with the supply‑demand gap continuing to widen slowly. Market attention should remain focused on developments in broader macro sentiment and any reductions in pig iron output at steel mills.

Steel Home: Last week, domestic steel prices continued to trend weakly, with trading activity remaining subdued. Looking at recent market conditions: first, the seasonal off‑peak period was pronounced, as high temperatures and frequent rainfall dampened downstream demand, resulting in weaker sales compared with the same period last year; second, blast furnace operating rates edged lower, and steel mills began gradually implementing production cuts and output restrictions, while construction‑steel inventories declined for two consecutive weeks, helping to rebalance supply and demand; third, steel and billet exports remained robust, with June’s steel exports posting their first year‑on‑year increase this year and billet exports hitting record highs for the second month in a row, thereby easing domestic supply pressures; fourth, the first round of coke price reductions has taken effect, iron ore prices are fluctuating within a bottoming range, and the cost center for steel has shifted downward. Overall, both supply and demand in the domestic market remain weak, leaving steel prices without clear momentum or catalysts; accordingly, domestic steel prices are expected to stay on a weak trajectory this week. Key areas to watch include: first, whether steel mills undertake any coordinated production cuts or output restrictions; and second, the policy tone for the second half of the year as outlined at the end‑of‑month Politburo meeting.

Lange: With the Middle East conflict continuing to escalate and international crude oil prices rising sharply, coupled with China’s domestic macroeconomic policy stance of maintaining steady growth and ample liquidity, strong policy expectations ahead of key meetings, a shift from weak to stronger supply releases, continued declines in market trading volumes, and resilient cost support, the domestic steel market is expected to remain in a weak, choppy range this week.

Tang and Song Dynasties: The domestic steel market is expected to trade in a narrow range at lower levels this week. The current market remains in the off-season, with demand unlikely to improve significantly, social steel inventories staying elevated, and costs continuing to ease—factors that collectively cap upside potential. However, production cuts providing a floor, coupled with expectations of supportive policies, limit downside risks considerably. A tug-of-war between weak seasonal realities and strong policy expectations may keep steel prices locked in a low‑range consolidation. Going forward, key factors to watch include the enforcement of Tangshan’s production curtailments, the pace of end‑user project starts, and the rate of inventory destocking. On the downside, support lies around 3,050; on the upside, resistance hovers near 3,110. Supply outlook: Recently, steel mills have been operating at a loss, prompting more proactive maintenance and output reductions, leading to a modest decline in national molten iron output—though the pace of the drop may be moderating. In Tangshan, heightened environmental protection measures during critical periods could trigger phased production cuts. Meanwhile, electric‑arc furnace operators are seeing meager profits from off‑peak electricity, so their operating rates are likely to remain subdued, constraining any meaningful increase in supply. Overall, steel output this week is expected to edge lower. Demand outlook: Downward pressure from three factors—high temperatures and rainy weather, tight construction‑site financing, and sluggish real‑estate recovery—has slowed end‑user activity, weighed on building‑material sales, and created divergent trends in sheet‑metal demand, leaving overall demand relatively inelastic. That said, as extreme weather conditions gradually abate, there is some room for marginal improvement in terminal demand. Inventory outlook: With supply tightening and demand remaining weak, inventory destocking lacks momentum, suggesting a slight rise in total steel inventories this week, with building‑material stocks increasing more than those of flat products. This week’s key focus areas: On the industry front, monitor the implementation and specifics of Tangshan’s production curtailments, changes in end‑user project starts, whether the decline in molten iron output is easing, the pace of recovery in apparent steel consumption, and the extent of inventory buildups in finished‑steel products. Also keep an eye on the policy tone set at the Politburo meeting at the end of July, as well as the Federal Reserve’s July interest‑rate decision and its dot‑plot projections. Risk considerations: Escalating U.S.–Iran tensions could push up oil’s geopolitical premium; persistently weak off‑season demand may lead to larger‑than‑expected inventory builds; Tangshan’s production cuts might fall short of expectations; and if the Politburo’s policy guidance falls below market consensus, anticipated positive effects could fail to materialize.

Zhuochuang Information: Steel prices are expected to trend lower this week, with adjustments likely to prevail. The underlying reasons are as follows: On the supply‑demand front, persistently hot and rainy weather continues to weigh on demand, while supply remains relatively stable, keeping the imbalance intact and capping price gains. Moreover, with the end of the month approaching next week, traders will be more inclined to sell off inventory to free up cash, providing only limited support to prices. In terms of raw materials, billet prices are likely to remain steady or edge lower, with cost support holding firm. As for market sentiment, investors still harbor certain expectations ahead of the Central Politburo meeting at month’s end; however, overall sentiment remains cautious, and market confidence has softened compared with last week. According to a survey by Zhuochuang Information, this week’s steel‑industry confidence index stands at 43.75, down 7.09 percentage points from the previous reading.

Han Weidong: On June 23, the price of strip steel in Tangshan was 3,165 yuan; by July 23, it had fallen to 3,160 yuan—a difference of just 5 yuan over the course of a month. Despite countless shifts in both domestic and international markets, steel prices have remained largely stagnant, fluctuating only slightly around this level for half a year—from last October through early April this year. Some companies have turned these persistent swings into opportunities, continuously refining and upgrading their operations, while others have been left stuck in a state of ongoing uncertainty. Recently, Wu Wenzhang, chairman of Gangzhi.com, and Song Lei of Tongsong Steel Network both voiced similar views: they see current prices as being at a low‑end range, with little upward momentum or room for further gains. The market’s minor fluctuations today are essentially trading time for space; when most firms are operating at a loss, such a situation is unsustainable, and gradual production cuts will inevitably follow—leaving the market poised for that outcome. Beyond fundamentals, two major factors are at play: first, whether the important end-of-month meetings will address the issue of “involution”; second, the short‑term inflationary pressures stemming from the Middle East conflict, which could weigh on undervalued black‑metal commodities. Looking ahead, however, the World Bank projects that the worst‑case scenario from the Middle East war would reduce global economic growth this year from an estimated 2.5% to 1.3%. Last year, the steel industry’s profits rebounded to over 100 billion yuan, offering some relief to many firms—but this year’s market has once again plunged numerous companies into confusion. Remaining idle is a waste; only transformation can pave the way forward.

Zhang Guangzhi, Deputy General Manager of Marketing at Youfa Group: Policy-wise: We are awaiting the Central Politburo meeting at month’s end, which is highly likely to unveil supportive measures. However, there is little upside for the traditional “old‑school” sectors of infrastructure and real estate; instead, we expect other industries to benefit from broader market momentum, which could, in turn, lift black‑commodity prices indirectly. Late Sunday evening brought news that the U.S. and Iran have halted military operations—overall, the positive implications outweigh the negatives, though in the short term the impact remains limited. Meanwhile, environmental production curbs marking the 50th anniversary of the Tangshan earthquake, along with online reports of policy‑driven output restrictions in Shanxi, have also fueled recent market speculation. All in all, the balance tilts toward more positive factors, offering at least some incremental support. Supply and demand: Last week, Mysteel’s inventory data showed production rising while inventories increased and apparent consumption declined—initially looking unfavorable. However, some analysts suggest this may reflect a lagged effect from last week’s typhoon, a view that holds logical merit. Average daily hot metal output last week stood at 2.377 million tonnes, down 15,100 tonnes month-on-month. Among the 247 sampled steel mills, the profit margin was 34.63%, a 2.6% decline from the previous week and 29.01% lower than the same period last year. Hot metal production has fallen for three consecutive weeks, with blast furnace maintenance expanding in scope; output is expected to continue contracting. Overall, both supply and demand remain weak, but excessive pessimism is unwarranted. With the end of the “fu” period in late August, the market will gradually enter its peak season. As long as hot metal output does not rise—ideally staying below an average of 2.35 million tonnes per day—and blast furnace profitability remains below 35%, the outlook for price gains, though modest, remains worth anticipating.