[SMM Hot Topic] Politburo Meeting Sends Positive Signals, but Can Steel Prices Sustain Their Upward Momentum?

On December 9, 2024, the Central Politburo meeting concluded, delivering numerous positive signals. The Central Economic Work Conference, held from December 11 to 12, also wrapped up, further clarifying the economic agenda for the coming year. The policy signals released during this meeting exceeded market expectations, and domestic monetary policy is expected to become more accommodative, which will help boost confidence in the stock and commodity markets. Following the announcement, commodity futures broadly rose. Specifically, ferrous metals series futures led the gains, and chemicals were strong. As of midday, coke and butadiene rubber rose over 3%, while rebar, glass, iron ore, HRC, and SHFE silver increased by more than 2%, and coking coal was up nearly 2%.

The December 9 meeting emphasized stabilizing the real estate and stock markets, preventing and mitigating risks in key areas and external shocks. On the consumption side, it called for significant efforts to boost consumption, improve investment efficiency, and comprehensively expand domestic demand. The chart below compares the main points of the December 2023 and December 2024 Politburo meetings. It is evident that the tone of economic policy, as well as monetary and fiscal policies, will become more proactive and accommodative. Notably, the phrase "strengthen extraordinary counter-cyclical adjustments" was mentioned for the first time in history, suggesting that subsequent policy measures will be more diversified. Additionally, the reintroduction of "implementing moderately accommodative monetary policy" for the first time in 14 years indicates that the central bank is expected to implement more aggressive interest rate cuts and RRR cuts next year.

However, with the conclusion of the Central Economic Work Conference on December 12, the meeting mainly reiterated the spirit of the Politburo meeting, without introducing additional unexpected policies. This led to a pullback during the night session, cooling the market. Intraday steel prices continued to gradually pull back. Currently, the prices of ferrous metals series products are still primarily determined by their own supply and demand dynamics. Considering the neutral steel production levels and low inventory in the industry, as well as the downstream manufacturing and export sectors remaining at high levels, short-term steel prices are expected to fluctuate rangebound.