[SMM Hot-Rolled Daily Review] Long Bearish Candle at Opening, How Much Downside Potential for Futures Coil?

On the first trading day after the holiday, the most-traded HRC contract plunged sharply in the morning but rebounded slightly in the afternoon, while spot prices declined compared to pre-holiday levels. Supply side, during and after the holiday, steel mills maintained moderate enthusiasm for HRC production, keeping supply at a high level. Demand side, in the first week after the holiday, end-use demand recovery still required time, with some market agents yet to fully resume operations, leading to a generally weak spot market. Raw material side, according to the SMM survey, pig iron production rebounded this week, with subsequent fluctuations expected, but no significant pressure from resumption of production was observed. Overall, during the holiday, tariff policies and central bank monetary policies caused fluctuations in overseas markets. However, the US tariff policy on domestic markets has not yet been implemented, and domestic macro policies await further clarification. Post-holiday, social inventory in the mainstream HRC market showed moderate YoY performance, with relatively small fundamental imbalances. It is expected that the decline in the HC2505 contract will be limited, awaiting sentiment digestion.