SMM HRC Daily: Futures Drop as "Production Cuts" Sentiment Wanes, Pre-Holiday Demand Cautious

[SMM HRC Daily Review] "Production cuts" sentiment fades, futures return to lows

Today, HRC futures prices showed a weak trend, basically returning to the level before the strong rally on Friday. The most-traded contract closed at 3210, down 1.27%. Today's spot prices decreased by 10-50 yuan/mt WoW. In terms of supply, the impact from maintenance on hot-rolled coil production this week was 40,600 mt, unchanged from last week. Next week, the impact from maintenance on hot-rolled coil production is expected to be 112,600 mt, an increase of 72,000 mt WoW. Short-term supply will remain at a high level. Demand side, some pre-holiday restocking demand was released over the weekend and on Monday, but with significant price fluctuations, overall pre-holiday restocking was relatively cautious. 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, and pre-holiday inventory maintains a good downward 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 pre-holiday time window is short, and the most-traded contract may continue to fluctuate rangebound. During the holiday, overseas risks still exist, so it is recommended to maintain a light position