The morning report on steel products indicates a weak rebound, with futures prices fluctuating and trending lower.
Market Information:
1. According to Iranian sources on the 19th, informed individuals stated that traffic through the Strait of Hormuz has dropped to zero and will remain closed as long as the United States continues its provocative actions.
2. Data from the National Bureau of Statistics shows China's GDP grew 4.7% year-on-year in the first half of 2026. Value-added of industrial enterprises above designated size increased by 5.4%. Fixed-asset investment fell by 5.7%. Total retail sales of consumer goods grew by 1.3%.
3. Central bank data indicates the aggregate financing to the real economy (AFRE) increased by 20.84 trillion yuan in the first half of 2026, 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 8% year-on-year, while M1 grew 4%.
4. National Bureau of Statistics data shows China's crude steel output in June 2026 was 83.67 million tonnes, up 0.4% year-on-year. Cumulative output for January-June was 499.95 million tonnes, down 3.0% year-on-year.
5. Customs data shows China exported 10.320 million tonnes of steel products in June 2026, a decrease of 21,000 tonnes or 0.2% month-on-month. Cumulative exports for January-June were 54.874 million tonnes, down 5.6% year-on-year.
6. On July 17th, trading volume for iron ore at major national ports was 622,000 tonnes, down 15.9% from the previous day. Trading volume of construction steel products among 237 major traders was 84,000 tonnes, up 10% from the previous day.
7. Last week, the blast furnace capacity utilization rate at 247 steel mills was 89.78%, down 0.77 percentage points week-on-week. The mill profitability rate was 37.23%, down 3.03 percentage points week-on-week. Average daily hot metal output was 2.3921 million tonnes, down 20,600 tonnes week-on-week.
8. Last week, supply of the five major steel product categories was 8.2582 million tonnes, down 212,100 tonnes or 2.5% week-on-week. Total inventory was 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 Analysis:
Rebar production continued to decline last week, cumulatively falling by 83,200 tonnes to 1.9684 million tonnes. Total inventory decreased by 76,000 tonnes to 6.9248 million tonnes. Apparent demand rebounded 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 efficiency across the rebar supply chain. The volatile situation in the Middle East has led to a slight rebound in raw material prices driven 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 material prices. In the short term, it is recommended to approach the steel market with a range-bound trading mindset.
Hot-Rolled Coil Analysis:
Hot-rolled coil production fell by 65,400 tonnes to 2.9748 million tonnes last week. Total inventory decreased by 45,400 tonnes to 4.3577 million tonnes. Apparent demand saw a slight decrease of 3,700 tonnes week-on-week to 3.0202 million tonnes. Currently, the production cash flow for some manufacturers is being eroded. In the short term, the scale of steel mill production cuts is expected to continue expanding, with production likely having further room to decline. The volatile Middle East situation has driven a slight rebound in raw material prices via crude oil. However, with losses on finished products worsening, the subsequent risk of blast furnace maintenance and production cuts is rising, limiting the upside for raw materials. In the short term, a range-bound trading approach is still recommended for the steel market.
In terms of strategy, for the rebar 2610 contract, consider the 3050-3150 range. For the hot-rolled coil 2610 contract, consider the 3270-3370 range.
Ferroalloy Analysis: Resistance Emerges
Viewpoint: Neutral
Demand from the steel mill sector continues to decline, with production cuts mainly concentrated in North China. It is anticipated that hot metal output will fall back to around 2.35 million tonnes. Whether there will be further production cuts depends on whether terminal demand for steel weakens further. Ferrosilicon production remains high, with factory inventory pressure significant. After the price rebound, the willingness to sell for hedging purposes has increased. Following the rise in ferrosilicon costs, profitability has deteriorated, but the pressure from losses is not yet substantial, and sustained production cuts have not materialized. Silicon manganese production has declined significantly, but factory inventories have hit a record high, requiring a prolonged period of low output to alleviate the pressure. Moreover, after the spot price of silicon manganese rose and costs weakened slightly, the pressure from losses has eased noticeably, which is not conducive to clearing the supply-side pressure.
Viewpoint: Treat ferroalloy prices with a range-bound mindset. For the ferrosilicon 09 contract, consider the 5500-5950 yuan/tonne range. For the silicon manganese 09 contract, consider the 5600-5950 yuan/tonne range. Strategically, continue holding out-of-the-money call options sold on the 09 contract.
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