HRC Futures Surge 1.51% Amid China-US Tariff Reduction Agreement, But Medium-Long Term Outlook Remains Bearish

Today, the most-traded HRC futures contract strengthened, closing at 3220 in the afternoon session, up 1.51%. In the spot market, the rally in futures prices drove an improvement in market sentiment, with trading at lower prices and speculative demand showing some improvement, although spot price increases in some markets were relatively weak. On the news front, the China-US Geneva Economic and Trade Talks concluded, and a joint statement was issued today. China and the US agreed to reduce tariffs over the next 90 days. This round of high-level economic and trade talks between China and the US achieved substantive progress, significantly lowering bilateral tariff levels, and market sentiment was notably boosted.

On the fundamental front, as May approaches, downstream demand will be impacted to some extent by the off-season, and it is expected that the apparent demand for HRC will pull back MoM in May. In terms of supply, the daily average production schedule for HRC in May will decrease slightly MoM from April, slightly better than previously expected. In addition, a consensus has been reached in the China-US tariff negotiations. Driven by positive news in the short term, HRC prices are expected to break through slightly upwards. In the medium and long-term, with the off-season demand expected to decline, and after the tariff benefits are fully priced in, if there is a lack of further favourable macro front stimulus, the price center of HRC will still trend downwards.