Market information:
1. U.S. Central Command announced on social media on the 16th that a new round of strikes was launched against Iran at 14:00 Eastern Time on the 16th, marking the "sixth consecutive night" of such actions, aimed at further degrading Iran's military capabilities.
2. Data from the National Bureau of Statistics shows that in the first half of 2026, China's GDP grew by 4.7% year-on-year; value-added of industrial enterprises above designated size increased by 5.4%; fixed-asset investment declined by 5.7%; and total retail sales of consumer goods rose by 1.3%.
3. Central Bank data indicates that the cumulative increase in aggregate financing to the real economy in the first half of 2026 was 20.84 trillion yuan, 2.02 trillion yuan less than the same period last year. New yuan loans in the first half totaled 10.72 trillion yuan. At the end of June, M2 money supply grew by 8% year-on-year, while M1 grew by 4%.
4. According to the National Bureau of Statistics, China's crude steel output in June 2026 was 83.67 million tonnes, a year-on-year increase of 0.4%. For the January-June period, cumulative output was 499.95 million tonnes, down 3.0% year-on-year.
5. Customs data reveals that China exported 10.32 million tonnes of steel in June 2026, a decrease of 21,000 tonnes or 0.2% from the previous month. Cumulative steel exports for the first half of the year were 54.874 million tonnes, down 5.6% year-on-year.
6. On July 16, transactions of iron ore at major domestic ports totaled 740,000 tonnes, up 57.1% from the prior day. Transactions of construction steel products among 237 mainstream traders amounted to 76,400 tonnes, down 18.3% day-on-day.
7. This week, supply of the five major steel products totaled 8.2582 million tonnes, down 212,100 tonnes or 2.5% week-on-week. Total inventories stood at 16.1606 million tonnes, down 178,600 tonnes or 1.1% week-on-week. Apparent consumption was 8.4368 million tonnes, up 0.9% week-on-week.
Rebar
This week, rebar production continued to decline, decreasing cumulatively by 83,200 tonnes to 1.9684 million tonnes. Total inventories fell by 76,000 tonnes to 6.9248 million tonnes. Apparent demand recovered by 94,700 tonnes week-on-week to 2.0444 million tonnes. Drawdowns in both mill and social inventories indicate an overall improvement in circulation across the rebar supply chain. The volatile situation in the Middle East has driven a slight rebound in raw material prices, supported by crude oil. However, losses on finished steel products have intensified, raising the risk of blast furnace maintenance and production cuts, which caps the upside for raw materials. In the short term, it is recommended to approach the steel market with a range-trading mindset.
Hot-Rolled Coil (HRC)
This week, HRC production decreased by 65,400 tonnes to 2.9748 million tonnes. Total inventories dropped by 45,400 tonnes to 4.3577 million tonnes. Apparent demand edged down by 3,700 tonnes week-on-week to 3.0202 million tonnes. Currently, production cash flow at some mills has been eroded. In the short term, the scale of steel mill production cuts is expected to continue expanding, and output is projected to have further room to decline. The volatile situation in the Middle East has driven a slight rebound in raw material prices, supported by crude oil. However, losses on finished steel products have intensified, raising the risk of subsequent blast furnace maintenance and production cuts, which caps the upside for raw materials. In the short term, it is still recommended to approach the steel market with a range-trading mindset.
On strategy, for rebar contract 2610, the reference range is 3050-3150; for hot-rolled coil contract 2610, the reference range is 3270-3370.
Ferroalloys: Range Trading Approach
View: Neutral
Ferroalloy prices are exhibiting a range-bound pattern. Results from typical steel mill tenders have been released successively, with ferrosilicon at 6,130 yuan/tonne and silicon manganese at 5,950 yuan/tonne. On the demand side, steel mills are entering a production reduction cycle. Daily average hot metal output fell by 20,000 tonnes this week and may gradually decline to around 2.35 million tonnes in the future, posing a significant downside risk for ferroalloy demand. Ferrosilicon production remains relatively high overall, with a slight reduction this week, indicating supply is not tight. Silicon manganese upstream inventories continue to hit new highs, and sustained price rebounds are not conducive to alleviating supply pressure. The fundamental supply-demand picture does not support a significant price increase.
View: Adopt a range-trading approach for ferroalloy prices. For ferrosilicon contract 09, the range is 5500-5950 yuan/tonne; for silicon manganese contract 09, the range is 5600-5950 yuan/tonne. Strategically, consider opportunistically establishing short positions in out-of-the-money call options for the 09 contract, specifically those 3-4 strikes out-of-the-money.
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