Ferrous metals series overall strengthened; short-term focus on demand sustainability

Last week, the ferrous metals series initially dropped and then rose. On the news front, domestic macroeconomic data during the holiday was overall satisfactory, leading to a dip in opening futures. In the early hours of the 19th, the US Fed announced a 50 basis point rate cut, reflecting the previous recession logic. Therefore, this time it brought more expectations of liquidity easing, driving a broad rise in the ferrous metals series. In the spot market, traders mainly focused on actively selling, and the trading atmosphere was decent.

In the short term, rebar maintained a destocking pace, with production expected to recover later, while HRC's reduction in production was slower, making inventory destocking more turbulent. Steel mill profits saw a phase of recovery. According to the SMM survey, pig iron production is expected to increase significantly in the next two weeks, coupled with pre-National Day restocking, leading to stronger demand for raw materials. Therefore, cost support was somewhat solidified, and pre-holiday restocking demand downstream could also be anticipated. Hence, steel prices are expected to continue a fluctuating upward trend this week. However, overall, peak season demand did not release as expected, so caution is advised for futures that jump initially and then pull back.