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Steel Morning Report: Balanced Supply-Demand, Futures Range-Bound Trading
Market Information:
1. Shagang has announced its late-September ex-factory prices, raising rebar, wire rod, and high-speed wire by 50 yuan per ton, while Zhongtian Steel and Yonggang have kept their ex-factory prices unchanged (unit: yuan per ton).
2. According to the bilateral agreement between China and Mongolia, the three major border ports will close for one day on September 25 for the Mid-Autumn Festival, close for seven days from October 1 to 7 for the National Day holiday, and resume operations on October 8.
3. Aowei Cloud data shows that total air conditioner production scheduling in October is up 4.5% year-on-year, with domestic sales scheduling down 2.5% and export scheduling up 11.1%, highlighting a clear divergence between domestic and overseas demand trends.
4. Last week, the total area of newly built commercial housing transactions (contracts signed) in 10 key cities reached 1.6388 million square meters, up 27.4% month-on-month and 5.5% year-on-year.
5. On September 22, iron ore transactions at major domestic ports totaled 798,000 tons, up 162.50% month-on-month, while construction steel transactions from 237 major traders reached 93,200 tons, down 16.34% month-on-month.
6. Last week, the supply of five major steel products was 7.9414 million tons, up 600 tons week-on-week; total inventory stood at 15.3773 million tons, down 168,800 tons week-on-week; weekly apparent consumption was 8.1102 million tons, down 1.35% week-on-week, with building materials consumption up 3.3% and flat products consumption down 1.8%. (Chu Xinli, Futures Trading Advisory Qualification No.: Z0018419, for reference only)
Rebar: Last week, rebar production was 1.7407 million tons, up 24,700 tons week-on-week, indicating a mild production resumption as the earlier concentrated output cuts by electric arc furnace mills have temporarily concluded. Long-process steel mills continue to face losses, and coke price hikes are squeezing their profits, limiting the potential for significant production increases, which imposes constraints on the supply side. Inventory shows a dual-decline pattern in both mill and social stocks, with mill inventory at 1.593 million tons, down 25,100 tons week-on-week, and social inventory at 4.7627 million tons, down 130,300 tons week-on-week, marking a third consecutive week of social inventory drawdown, with total inventory also declining. Apparent demand reached 1.8961 million tons, up 41,600 tons week-on-week, as September demand shows marginal improvement, with infrastructure catch-up projects and completion guarantees supporting just-in-time deliveries, though traders are mainly selling on demand with insufficient speculative restocking, reflecting weak recovery rather than an explosive peak season. The increase in demand exceeds the increase in supply, supporting inventory drawdowns, but year-on-year inventory levels remain elevated. The futures market continues to fluctuate within a range, with the core focus on whether the inventory drawdown pace can be sustained. Strategy-wise, the rebar 2610 contract is expected to trade within a range of 3030-3100 yuan per ton, while the 2701 contract is expected to trade within a range of 3080-3150 yuan per ton. (Chu Xinli, Futures Trading Advisory Qualification No.: Z0018419, for reference only)
Hot Rolled Coil: Last week, hot rolled coil production was 3.2078 million tons, down 38,900 tons week-on-week, mainly due to maintenance on some hot rolling mills; the profitability of hot rolled coil products is better than that of rebar, so steel mills still have the intention to shift molten iron toward flat products, leading to weaker output cuts and greater production rebound potential later. Inventory structure shows clear divergence, with mill inventory at 926,600 tons, up 24,400 tons week-on-week, as direct mill deliveries slow and resources accumulate on-site; social inventory at 2.7045 million tons, down 36,600 tons week-on-week, with the minor social inventory drawdown driven by traders reducing stocks for sales rather than end-users actively restocking. Apparent demand was 3.2201 million tons, down 28,400 tons week-on-week, as the manufacturing peak season has not met expectations, with downstream processors mainly placing small orders and maintaining low inventory purchasing, with only automobiles, construction machinery, and exports providing marginal resilience. The supply decline exceeds the demand decline, barely sustaining a minor social inventory drawdown, but total inventory is rising. Compared to rebar's "rising apparent demand with dual inventory drawdowns," the fundamentals for flat products are weaker, driving the convergence of the hot rolled coil-rebar price spread. Hot rolled coil futures are range-bound, with upward elasticity weaker than rebar. Strategy-wise, the hot rolled coil 2610 contract is expected to trade within a range of 3280-3330 yuan per ton, while the 2701 contract is expected to trade within a range of 3290-3330 yuan per ton. (Chu Xinli, Futures Trading Advisory Qualification No.: Z0018419, for reference only)
Ferroalloys: Fluctuating toward the bottom - Neutral view. Production cut news from major southern silicon manganese producers provides phased support to the market, while silicon iron performance remains weak. The alloy market currently faces two pressures: first, insufficient demand growth. Steel mills have poor profitability, and restocking is mostly aimed at maintaining safe inventory levels, with a significant risk of production cuts after the National Day holiday; second, there is some room for concessions on the raw material side. Coal policies to ensure stable production and supply are being strengthened, with domestic output expected to improve month-on-month, and prices still have room to fall, though at a relatively slow pace. Alloy factories are also under significant loss pressure, and production cuts provide phased support to prices. Overall, the pressures have not yet disappeared, upward drivers are limited, and the market is expected to fluctuate toward the bottom. View: Stand aside for now.
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