SMM HRC Daily: Futures Rise Again; Fundamentals in Slight Imbalance, Cautious Outlook

[SMM HRC Daily Review] HRC Futures Continue to Rise; What's Next for the Trend?

​Today, HRC futures prices extended the gains from Friday's night session, holding up well throughout the day. The most-traded contract closed at 3237 in the afternoon session, up 0.84%. Today's spot prices remained stable or slightly declined compared to the weekend. In terms of supply, there are still relatively few new rolling line maintenance activities at steel mills, and HRC supply fluctuates at a high level. In terms of demand, spot prices remain high, and overall demand release improved slightly compared to yesterday. On the cost side, steel mills may have expectations of restocking raw materials before the holiday, but with limited increases in pig iron production, the support from raw materials is neutral. Overall, the imbalance in the HRC fundamentals is relatively small. There are still expectations for end-users to restock before the holiday, and the decline in weekend inventory maintains a positive trend. Currently, there are expectations that the timing of the actual demand weakening will be postponed, and there are still expectations for macro policy efforts. However, in the short term, the talk of production cuts is more about improving sentiment and should not be over-pursued. Today's futures market rally has lacked momentum, and caution should be taken against a return to lower levels as sentiment fades.