Experts say city—September 28

My Steel: On the supply side, last week’s total output of the five major steel product categories reached 7.7968 million tonnes, down 144,600 tonnes from the previous week. The mix of steel product outputs remained unchanged this period, with both construction‑steel and sheet‑steel production declining. Total inventories of the five major steel products stood at 14.8197 million tonnes, a weekly drop of 557,600 tonnes, or 3.6%. Inventory reductions were observed across all five product categories, with construction steel down 526,400 tonnes and sheet steel down 31,200 tonnes. On the demand side, weekly consumption of the five major steel products totaled 8.3544 million tonnes, with construction‑steel consumption up 8.1% week over week and sheet‑steel consumption up 0.4%. The consumption patterns of construction steel and sheet steel remained broadly aligned. For rebar, short‑term production is expected to see further modest gains, while inventories continue to decline—though at a slower pace—and apparent demand has edged lower. In hot‑rolled coil, last week’s weak supply‑and‑demand dynamics persisted: production stayed near year‑earlier lows, and inventories declined slightly. Supply pressures are likely to remain limited in the near term, with overall inventories remaining tightly balanced, though year‑on‑year pressure persists. With the upcoming holiday period this week, downstream shutdowns could trigger a seasonal dip in demand, raising the risk of accelerated inventory buildups. In the short term, cost support for black‑metal prices is weakening; although finished‑steel fundamentals have improved, the downward trend in pig iron output continues to weigh on raw‑material demand, suggesting limited room for a rebound in black‑metal prices.

Steel Home: Last week, domestic steel prices initially rose before easing, trading in a narrow range. Construction steel outperformed sheet steel. As the National Day holiday approached, downstream demand for inventory replenishment picked up, leading to a two‑week improvement in market turnover. Looking ahead to and around National Day, three key factors will shape the market: first, as the holiday draws near, pre‑holiday restocking demand is expected to weaken, with inventories likely to build during the break, creating downward pressure on prices afterward; second, sluggish real estate activity combined with a sharp slowdown in infrastructure investment has kept overall downstream demand below expectations; third, widespread losses at steel mills have prompted increased production cuts and maintenance shutdowns, easing supply pressures and providing some support to prices; fourth, steelmakers are currently grappling with high coal and coking‑coal costs, which help underpin prices. Overall, weak demand and the potential for inventory buildup over the holiday cap upside potential, while production cuts and elevated costs provide a floor for steel prices. With downstream players likely to replenish stocks after the holiday, steel prices are expected to remain broadly stable with modest fluctuations before National Day, followed by a slight upward trend thereafter.

Lange: With the situation in the Middle East easing temporarily, geopolitical premiums have abated; China’s economy is steadily recovering, liquidity remains accommodative, and pro‑growth policies continue to provide support. Meanwhile, real estate investment remains under pressure, supply‑side constraints are easing, and market transaction activity has been mixed. Under the influence of weakening cost‑supporting factors, domestic steel prices are expected to trend lower amid volatility this week.

Tang and Song Dynasties: This round of the pre‑holiday cycle is expected to see steel prices first stabilize and then weaken: in the run‑up to the holiday, spot and futures markets will trade normally, with end‑user rush‑work and pre‑holiday stocking potentially sparking a temporary rebound in activity, though gains will be limited and prices likely to remain rangebound. During the holiday, domestic markets will be closed; attention should be paid to overseas iron ore swaps, the U.S. dollar, and macroeconomic developments for potential market disruptions at the post‑holiday open. Once trading resumes, the direction will hinge on the magnitude of inventory build‑ups over the break and the pace of demand recovery, putting downward pressure on price centers. With supply-side constraints marginally tightening and cost‑support easing, coupled with pre‑holiday hedging and risk‑aversion liquidations, a sustained trend is unlikely during this period. For the rebar January contract, look for support around 3,080 and resistance near 3,130. Supply Outlook: Nationwide blast‑furnace operating rates and hot‑metal output have continued to decline, with steel mills posting across‑the‑board losses. Production‑cutting pressures have become evident at the national level, though Tangshan has yet to deliver on its commitments. Output is expected to ease slightly before the holiday, while after the holiday, the key question will be whether these cuts shift from “expectations” to “implementation.” Demand Outlook: Pre‑holiday end‑user rush‑work and inventory‑building may bring a temporary rebound in transaction volumes, but the peak season’s potential remains under‑realized, and restocking tends to contract sharply once demand eases, limiting any meaningful upside. Plate‑steel demand continues to remain weak. The pace of post‑holiday demand recovery will be the primary variable; a slower-than‑expected rebound could further exacerbate inventory‑buildup pressures. Inventory Expectations: The pre‑holiday inventory‑restocking surge will provide only limited support for destocking, with total inventories expected to decline modestly and within constrained bounds. With markets closed during the holiday but production continuing, post‑holiday inventory‑buildup pressures are set to intensify. This Week’s Key Focuses: Progress in the China–U.S. presidential talks and developments in trade policies such as tariffs; the outcome of the China–U.S. summit; official and Caixin PMIs from China; the U.S. August core PCE and second‑quarter GDP final readings; and whether the Politburo meeting scheduled for late September will take place. Also on the radar: the resumption of coking‑coal production; whether the first round of price cuts for coke can be implemented before National Day; whether pre‑holiday restocking will see a second wave of volume; and the accumulation of steel inventories over the holiday period, along with changes in mill margins and the enforcement of production‑control measures.

Zhuochuang Information: Steel prices are expected to remain broadly stable this week, with minor adjustments. The underlying reasons are as follows: On the supply side, steel mills have maintained relatively steady production, leading to a steady increase in output; meanwhile, with the National Day holiday approaching, market activity remains subdued, leaving insufficient fundamental support for prices. On the demand side, however, policy developments continue to tilt in favor of bullish sentiment, and raw material prices—particularly billet—remain firm, providing cost‑side support. Amid ongoing tug‑of‑war between bulls and bears, prices are likely to trade within a narrow range, with limited room for significant moves. Additionally, survey data indicate a waning level of confidence among market participants regarding the near‑term outlook. According to a survey by Zhuochuang Information, this week’s steel industry confidence index stands at 46.14, down 4 percentage points from the previous reading.

Han Weidong: The market has entered a pre-holiday period of volatile, choppy trading; traders can simply focus on prudent operations over the holiday. Current price levels pose neither significant risks nor clear speculative opportunities. The steel industry has slipped into a phase of widespread losses, with production showing strong restraint and firms displaying a robust willingness to support prices. Even the China Iron and Steel Association’s leading dozen or so mills have jointly called for output cuts, suggesting that market sentiment will remain relatively stable amid fluctuations. Judging from the recently released data on the five major steel product categories—both output and apparent consumption—current figures are broadly unchanged from four weeks ago. Production reflects steelmakers’ hesitancy to further curtail output, while demand underscores the market’s sense of helplessness. However, it’s important to note that both year-on-year output and demand have declined sharply, indicating weak supply and demand—a trend that aligns closely with the year-over-year drop in major investment indicators. Based on current molten iron output, it remains feasible to work together to stabilize prices at their present level, but reversing the industry-wide loss-making situation appears highly unlikely without more aggressive production cuts. Going forward, close attention should be paid to molten iron output and any emerging low‑price opportunities.

Zhang Guangzhi, Deputy General Manager of Marketing at Youfa Group: This year’s “Golden September” rally is drawing to a close. Last week, the steel market staged a marked reversal, with the previous trend of declining raw-material costs coming to an end; coking coal and coke futures led the way in halting their declines, though the likelihood remains high that prices will resume their pullback later on. Peak-season end‑user demand has yet to pick up meaningfully, and with risk‑aversion sentiment intensifying ahead of the holiday, overall trading volume has contracted and price movements have remained narrowly range‑bound. Steelmakers’ profit margins have been further squeezed, and a wait-and-see mood prevails across the industry.

As of the close on September 24, futures markets were generally slightly firmer: rebar contract 2701 settled at 3,118 yuan/ton, up 0.71% for the week; hot-rolled coil contract 2701 closed at 3,298 yuan/ton, up 0.24%; coking coal was quoted at 1,974.5 yuan/ton, up 1.13% weekly, while iron ore prices remained steady at 713.5 yuan/ton. Fundamentally, both production and inventories are declining: weekly output of the five major steel products fell to 7.7968 million tons, down 144,600 tons from the previous week; total inventory stood at 14.8197 million tons, a reduction of 557,600 tons week-on-week, and average daily molten iron output slipped to 2.3566 million tons. As a result, steel mill profit margins dropped to 6.93%, with per-ton losses continuing to widen; however, blast furnace operating rates remain at 82.01% and have not followed suit. The costs associated with restarting idled blast furnaces—such as furnace drying and resumption of production—are far higher than the losses incurred by maintaining continuous operations, which is one reason why mills prefer to keep running even at a loss. Market conditions reflect stable finished‑steel prices, stabilizing raw‑material prices, weakening corporate profitability, and a pre‑holiday dilemma of whether to rise or fall.

Raw Material Side: The market has halted its decline, and the spot‑price correction continues. In the coking‑coal producing regions, trading has cooled sharply: on September 23, Shanxi coking coal was listed at 963,000 tonnes, but only 354,000 tonnes were sold, with the auction failure rate surging from 18.6% to 63.2%; Mongolian #5 raw coal has seen all lots go unsold for six consecutive days, while inventories of refined coking coal at the source have risen by 400,000 tonnes over the week, and the benchmark price of Linfen’s prime coking coal has been cut by RMB 104 per tonne. At present, the first round of proposed price cuts for coke has yet to take effect; should such measures be implemented, the coal‑and‑coking‑coal market could resume its downward trajectory.

Supply side: Steel mills have proactively curtailed production, while exports continue to divert domestic supply pressure. This week, rebar output reversed its upward trend and declined, falling by 87,200 tonnes month-on-month. Steel export performance has been strong: from September 15 to 21, export shipments totaled 2.8567 million tonnes, up 4.7% from the previous week and 17.3% year on year, effectively easing domestic supply constraints. However, as steelmakers’ losses deepen, their willingness to resume production remains subdued, leading to a continued decline in hot‑metal output and limiting any meaningful increase in supply.

Demand side: The peak-season rally in the steel market failed to materialize, with pre-holiday restocking efforts remaining weak. On September 23, 237 building‑materials companies reported sales of 93,400 tonnes, up only a marginal 0.16% from the previous week, as underlying demand at the end‑user level remained subdued. Spot prices showed mixed trends, with rebar posting a modest weekly gain of 0.59% and hot‑rolled coil edging down 0.33%. On the positive side, the latest round of China–U.S. economic and trade consultations yielded several agreements, including tariff reductions and the establishment of a trade council, which have marginally improved the external‑trade environment; however, these developments are unlikely to offset the sluggish pre‑holiday restocking sentiment domestically.

This week (September 28–30) comprises just three trading days before the National Day holiday begins. Market sentiment remains cautious, but pre-holiday restocking demand persists—so avoid excessive pessimism. While coking coal and metallurgical coal costs have eased moderately and iron ore prices remain firm, the decline in hot‑metal production costs has been limited. Last week, blast furnace shutdowns increased, leading to tighter supply of coil and strip in some regions, while construction‑steel prices already began to pull back. Investors should neither rush to stockpile resources indiscriminately nor overlook locally advantageous supplies; instead, they should base their decisions on the actual local supply‑and‑demand dynamics.