Experts say city—September 7

My Steel: On the supply side, last week’s output of the five major steel products totaled 7.9606 million tonnes, up 43,000 tonnes from the previous week. This period saw a divergence in the product mix: construction‑steel production declined, while flat‑steel output rebounded. Total inventories of the five major steel products stood at 15.732 million tonnes, down 182,600 tonnes week over week, a 1.1% drop. Inventory reductions were observed across all five product categories, with construction steel and flat steel showing consistent trends: construction steel stocks fell by 119,400 tonnes, and flat steel by 63,200 tonnes. On the demand side, weekly consumption of the five major steel products reached 8.1432 million tonnes, with construction‑steel consumption down 0.5% from the prior week and flat‑steel consumption up 1%. Among the five products, demand patterns diverged, particularly between construction steel and flat steel. Regarding rebar, this week’s resumption of production is likely to keep output rising, while the decline in apparent demand is narrowing marginally. With improving weather conditions, the rate of funds being allocated to sampled projects has also shown a marginal recovery. Going forward, rebar fundamentals are expected to improve gradually, apparent demand to normalize, and inventories to continue declining. For hot‑rolled coil, supply rebounded last week, and total inventories continued to ease slightly. In the short term, supply pressures on hot‑rolled coil are likely to remain limited, with inventories staying in a tight balance. Steel prices will continue to face significant cost‑driven volatility, as geopolitical tensions remain volatile and the coal‑coking market remains tightly constrained. However, as costs rise, expectations of production cuts—triggered by negative feedback—are strengthening. Market attention should remain focused on the pace of steel mill restarts and on how coal‑coking supply dynamics affect black‑metal pricing.

Steel Home: Last week, domestic steel prices initially rose before easing, trading in a generally strong and volatile range, with spot prices heavily influenced by futures. From a fundamental perspective, the steel market environment continues to improve. First, coal and coking coal supplies remain tight, driving further price increases; in major regions, the fourth round of coke price hikes has taken effect, with cumulative gains of 350–375 yuan per ton, including a 200–220 yuan per ton increase last week. This sharp rise in coal and coking‑coal prices, coupled with a rebound from low levels in iron ore, has pushed up immediate steel production costs by roughly 200 yuan per ton, underscoring a clear cost‑driven trend. Second, recent steel price increases have lagged behind the pace of rising costs, leaving most mills producing standard grades unprofitable and imposing constraints on output. Third, steel inventories have continued to decline, easing inventory‑related pressure. On the downside, rainfall in some areas has dampened downstream demand, leading to weaker sales. Overall, the market remains characterized by “strong supply contraction, weak demand recovery, robust coal and coking‑coal price gains, and a rising cost center.” Accordingly, domestic steel prices are expected to edge higher this week.

Lange: With geopolitical tensions in the Middle East remaining entrenched, global commodity prices initially declined before rebounding; China’s economy continued to operate steadily, while the central bank’s medium-term lending facility (MLF) operations helped maintain ample liquidity. Fiscal and monetary policies worked in tandem to bolster domestic demand, and supply-side constraints kept easing. As market trading volume shifted from gains to losses and cost support strengthened once again, domestic steel prices are expected to experience volatile upward pressure last week. With renewed escalation in Middle Eastern geopolitical frictions and rising shipping risks in the Strait of Hormuz, coupled with a marginal improvement in the August manufacturing PMI, ongoing supply‑side easing, and further declines in market activity—underpinned by markedly stronger cost support—domestic steel prices are likely to trend higher amid volatility this week.

Tang and Song Dynasties: This week, the steel market is expected to experience volatile adjustments, with a supply‑side contraction, demand recovery, and cost‑supported price floors shaping the outlook. On the supply side, losses are curbing a modest decline in hot‑metal output; “Golden September” is fueling expectations of demand improvement; both mill and social inventories continue to see slight drawdowns; and costs remain underpinned by a floor, though upward momentum is marginally weakening. Key focus will be on U.S. August nonfarm payrolls and shifts in Fed rate‑hike expectations for September, as well as the release of China’s August CPI, PPI, and financial data, alongside weekly end‑user sales and inventory‑clearance trends—measures that will help validate peak‑season demand. For the rebar January contract, support lies near 3,125, while resistance looms around 3,175. Supply outlook: Following the fourth round of coking‑coal price hikes, cost pressures persistently pass through to steel mills; coupled with additional blast‑furnace maintenance scheduled in some regions in September, total steel output is likely to remain on a contractionary trajectory this week. However, given that hot‑metal production has already retreated significantly from its recent peak, further cuts are limited, and output is expected to edge lower rather than plunge. Demand outlook: As weather conditions improve and project funding becomes more readily available, there are expectations of an accelerated pace of infrastructure project starts, providing support to end‑use demand. Overall, demand shows room for recovery; building‑materials demand is forecast to warm moderately, while sheet‑steel demand remains resilient, leading to a small uptick in overall apparent steel consumption—though the magnitude of the rebound remains relatively muted. Inventory outlook: With supply tightening and marginal improvements in end‑user demand, the supply‑demand balance is set to tighten slightly, and total market inventories are expected to continue trending lower this week. This week’s key watch points include: U.S.–Iran tensions and navigation in the Strait of Hormuz; close attention to U.S. August nonfarm payroll data and any associated recession‑related headwinds; monitoring the implementation of Canadian steel tariffs and the fallout from the Asia‑Pacific Steel and Iron Ore Conference; domestically, tracking August import/export figures, CPI, and PPI to gauge changes in steel exports; the pace at which coking‑coal price hikes are being passed through; fluctuations in hot‑metal output; the extent to which “Golden September” translates into stronger end‑user demand; stability in building‑materials sales; the rate of steel inventory destocking; and volatility in mill margins and shifts in producers’ willingness to cut output.

Zhuochuang Information: Steel prices are expected to remain broadly stable with a slight upward bias this week. The underlying reasons are as follows: On the one hand, rising raw material costs have pushed up the cost of steel pipe inventory, while earlier weak demand has left the market in a widespread price inversion. As losses mount, traders’ willingness to hold firm on prices is likely to strengthen, providing solid support at the lower end and driving prices higher. On the other hand, downstream demand is recovering only slowly, with insufficient follow‑through at elevated levels; coupled with volatile futures markets, market participants remain cautious, prioritizing sales and thus exerting downward pressure on prices. Overall, we forecast that prices will trend steadily to slightly firmer this week. In terms of confidence, Zhuochuang Information’s survey shows this week’s steel industry confidence index at 50.77, down 4.34 percentage points from the previous period.

Han Weidong: Last Monday, in both a short video and on Douyin, I urged everyone to keep an eye on two key factors going forward: steel prices either failing to decline or remaining at elevated levels, and coking coal prices either stalling or seeing an improvement in supply‑demand dynamics. At present, both trends have shifted, but neither has yet met expectations. Steel mills’ profitability has deteriorated further following price hikes, clearly indicating that production cuts have not been sufficient. Fortunately, output of the five major steel products has declined sharply for four consecutive weeks year over year, while apparent demand has fallen by only half as much. Inventories have also been declining for four straight weeks, leaving the market in a state of weak equilibrium.

If steel mills fail to swiftly cut production, any improvement in corporate profits will be beyond their control and left to chance—relying on a resumption of coal‑mine output, a rapid restoration of customs clearance for Mongolian coal, a stall or decline in spot coking‑coal prices, and, above all, a halt to further increases in coke prices. Steel prices are under pressure ahead of both the Mid-Autumn Festival and the National Day holiday. The most effective solution is to swiftly and significantly cut production, boost profitability, and ease the short-term squeeze on coking coal and coke prices as well as the upward price pressure. For distributors, conditions have simplified: with current prices hovering around the annual average, they can operate normally.

Zhang Guangzhi, Deputy General Manager of Marketing at Youfa Group: With the passing of White Dew and the approach of the Autumn Equinox, we find ourselves in the beautiful mid‑autumn season—when oranges turn golden and tangerines grow lush green. For the steel market, this marks a pivotal moment: the start of the peak “Golden September” demand period, coupled with cost‑driven support, creating a powerful two‑way resonance. As dew condenses and turns white, autumn officially begins—and with it, the true starting line for steel’s “Golden September” rally. With the seasonal shift to cooler weather, the steel market is entering its peak season, heating up as temperatures gradually decline; yet it is not just raw material costs that continue to rise—so too does the long‑awaited traditional peak‑season demand.

Last week, the overall market can be summed up in one sentence: cost pressures are bullish, “Golden September” remains alluring, yet trading activity stays relatively weak. On the night session, rebar RB2701 closed at 3,173, and hot-rolled coil HC2701 at 3,389, with prices dancing to the prevailing winds. Coking coal has seen four rounds of price hikes fully implemented, with a fifth on the way, while coking coal supplies remain tight; meanwhile, U.S.–Iran tensions have driven up freight rates and energy costs—creating a situation where the market is rising even as it operates at a loss. In the construction‑materials sector, weekly trading volume for the first week of September stood at 82,100–106,600 tons across 237 mills, up from the previous week. Steel mill profit margins edged up to 30.3%, yet this contrasts sharply with molten iron output of 2.3682 million tons—a clear divergence between high production and low profitability. Market sentiment has been volatile and tilted bullish, but upside remains capped: below, cost support and anti‑involution measures provide a floor, while above, the allure of “Golden September” and profit margins cap further gains.

Early market sentiment has set the tone: the bottom is solidifying, and upside potential remains to be tested. The policy floor for July has already taken shape. Following a month of observation, it is clear that this round of policy support goes beyond mere rhetoric—it comprises a concrete, implementable, and verifiable package of measures: five government departments have issued a “Stabilizing Growth Plan,” which strictly prohibits the addition of new steel production capacity; the 2026 national unified rules on capacity replacement now enforce a 1.5:1 reduction‑in‑capacity standard; the Central Economic Work Conference has firmly established a regulatory stance aimed at curbing industry-wide “involution”; and a crude steel output cut target of approximately 2% by 2026 is accompanied by a complementary RMB 20 billion green‑industry fund.

I’m setting the tone for this week with eight characters: “Double bottom support, elasticity yet to be proven.” The overall market outlook remains positive.

1. The double bottom has been firmly established below: the policy floor (irreversible supply contraction) plus the cost floor (losses forcing production cuts). The downside is now effectively capped: five rounds of coking‑coal price cuts, maintenance shutdowns hitting new year‑to‑date highs, and 70% of producers operating at a loss—driving coordinated output reductions. This cost floor is real, not just a slogan.

2. Elasticity above, but not a ceiling: Whether Jinjiu’s trading volume can surpass 100,000 tons per day will be the sole arbiter—only if it does will it signify “demand confirmation”; otherwise, it will remain merely a weak rebound driven by “cost pressures.”

3. Structural differentiation persists: the trend of manufacturing steel consumption—accounting for 52%—surpassing that of the construction sector is long-term, amid a pattern of strong plate products and weak long products, as well as strong pipe products and weak rebar.