Fundamental trading weight increases, short-term steel prices remain volatile

Last week, the ferrous metals series slightly strengthened after bottoming out two weeks ago. On the macro front, the National Development and Reform Commission held a meeting on Tuesday with no substantial favorable policies; mid-week, several cities including Guangzhou proposed detailed policies, and local government debt resolution efforts were accelerating, providing favorable policies. In the spot market, demand for construction steel in the northern regions declined due to temperature effects, while manufacturing demand remained resilient.

In the short term, according to the SMM survey, if the previously overhauled blast furnaces resume production as scheduled this week, pig iron production is expected to increase, with cost support remaining neutral overall. For steel, although construction steel demand shows a seasonal weakening trend, demand for sheets & plates remains resilient, and the inventory of the five major materials is expected to continue depleting, albeit at a slower rate. Overall, there are no contradictions in the fundamentals of steel, and short-term steel prices are expected to continue fluctuating rangebound, awaiting further macro developments.