Experts say city—July 27

My Steel: On the supply side, last Friday’s output of the five major steel product categories totaled 8.3743 million tonnes, up 116,100 tonnes week-on-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 from the previous week, or 0.8%. Overall inventories rose slightly, with construction‑steel and sheet‑steel stocks moving in tandem: construction‑steel inventories built up 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, with construction‑steel down 3.8% and sheet‑steel down 1.6% compared with the prior week. 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 hot and rainy weather, these factors have weakened overall demand. We expect rebar production to see a modest uptick this week, further exacerbating the supply‑demand imbalance. As for hot‑rolled coil, with previously idled mills gradually resuming operations, supply is showing marginal improvement; 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 participants should closely monitor developments in 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, exports of both finished steel and billets remained robust—June saw year‑on‑year growth in steel exports for the first time this year, and billet exports hit record highs for the second month in a row, easing domestic supply pressures; fourth, the first round of coke price reductions has taken effect, iron ore prices have been fluctuating within a narrow range at the bottom, 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: (1) whether steel mills undertake any coordinated production cuts or output restrictions; and (2) 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 macroeconomic policy stance of maintaining stable growth and ample liquidity, strong expectations for policies ahead of key meetings, a shift from weak to stronger supply releases, sustained 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 pattern. 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 looms 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, environmental protection measures for critical periods have been activated, likely resulting in temporary production cuts at local mills. Meanwhile, electric‑arc furnace operators are seeing only thin profits from off‑peak electricity, so their operating rates are expected to remain subdued, constraining any meaningful increase in supply. Overall, steel output this week is likely to edge lower. Demand outlook: Downward pressure on the demand side stems from three factors—high temperatures and rainy weather, tight construction‑site financing, and sluggish real‑estate recovery—slowing end‑user construction activity, weakening rebar sales, and 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, the momentum for destocking is limited, suggesting a slight rise in total steel inventories this week, with rebar stocks increasing more than flat‑rolled product inventories. This week’s key focus areas: Industry: Monitor the implementation and specifics of Tangshan’s production curtailments, changes in end‑user project starts, whether the decline in molten iron output is beginning to moderate, the pace of recovery in apparent steel consumption, and the extent of inventory build‑ups 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. Risks to watch: Escalating U.S.–Iran tensions driving up the geopolitical premium on crude oil; persistently weak off‑season demand leading to larger‑than‑expected inventory builds; weaker-than-expected enforcement of Tangshan’s production cuts; and policy guidance from the Politburo falling short of market expectations, thereby dashing anticipated positive effects.

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 SteelHome, and Song Lei of Tangsong Steel Network have 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 to await 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 many into confusion. Remaining idle is a waste; only transformation holds the key to a 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 unlikely to be much positive news for the traditional “old‑guard” sectors of infrastructure and real estate; instead, we expect other industries to benefit, spurring a broader rally in financial markets that could, in turn, bolster black‑metal commodities. Late Sunday evening, reports emerged that the U.S. and Iran had halted military operations—overall, the upside outweighs the downside, though in the short term the impact remains limited. Meanwhile, environmental production curbs marking the 50th anniversary of the Tangshan earthquake, coupled with online rumors 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 now fallen for three consecutive weeks, with the scope of blast furnace maintenance continuing to expand, suggesting further output contraction going forward. 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 the peak season. As long as hot metal output does not pick up—ideally staying below an average of 2.35 million tonnes per day—and blast furnace margins remain below 35%, the upside potential in the near term, though likely modest, remains worth anticipating.