Macroeconomic Outlook and Steel Market Dynamics: Slight Downward Pressure on HRC Prices in May

On the news front, domestically, the macro focus is on whether the Politburo meeting at the end of April will introduce policies that exceed expectations. Internationally, under the prevalence of trade protectionism, the policy risks related to tariffs are relatively high.

On the supply-demand fundamentals, steel mill profits have pulled back but remain above the break-even line, with production enthusiasm undiminished, and the production of plates and coils is expected to continue rising. Against the backdrop of high production, the apparent demand for HRC in May is slightly cooler compared to the same period in previous years. As the off-season effect deepens, the supply-demand imbalance is gradually accumulating, and the risk of inventory buildup is expected to increase in mid-to-late May.

Cost side, with pig iron peaking and pulling back, ore prices are in the doldrums, and coke is also mostly oscillating and stabilizing. In the short term, steel mill costs remain relatively firm.

Overall, considering that the macro meeting is unlikely to introduce significantly favorable policies, although overseas risks affect market sentiment, overall exports in May still maintain strong resilience. Therefore, HRC prices are expected to face slight downward pressure in May, with a relatively small risk of a deep decline. The most-traded contract is expected to fluctuate within the range of 3,050-3,250.