[SMM Steel Morning Meeting Summary] Steel inventory continues to decline! Short-term steel price support at lower levels remains effective

[SMM Domestic Ore] Driven by price increases at steel mills in some areas, the iron ore concentrates market in the Tangshan region saw prices rise by 5 yuan/mt. Currently, the dry-basis tax-inclusive delivery-to-factory prices for Fe66% iron ore concentrates are 935-940 yuan/mt. Most steel mills in the Tangshan region are adopting a slower purchasing pace, with local finished steel prices and sales volumes remaining weak. To safeguard profits, steel mills are mainly conducting tenders when their raw material inventories are relatively tight, primarily purchasing as needed. Resources at mines and beneficiation plants remain tight, and the process of resuming production has been relatively slow. However, considering the recent weak performance of iron ore futures, it is expected that local iron ore concentrates prices will continue to fluctuate in the doldrums in the short term.

[SMM Imported Ore] Yesterday, the DCE iron ore futures market fluctuated repeatedly, with the most-traded contract I2509 closing at 727, up 0.14% for the day. Traders showed moderate enthusiasm for selling, with some offering lower prices. Steel mills purchased as needed. The market trading atmosphere remained moderate. The mainstream transaction prices for PB fines in the Shandong region were 760-765 yuan/mt, down 0-5 yuan/mt from the previous day. In the Tangshan region, the transaction prices for PB fines were around 775 yuan/mt, basically flat from the previous day. The apparent demand for the five major steel products declined slightly yesterday. Total inventory continued to decline. The supply-demand imbalance is accumulating, but the pressure remains relatively small. Additionally, the State Council held a press conference, and market sentiment turned positive. Sentiment is optimistic. Ore prices continued to hold up well. Considering the healthy fundamentals of iron ore in the short term, with ore prices facing upward and downward pressures, it is expected that prices will continue to fluctuate rangebound in the short term.

[SMM Rebar] Yesterday, the futures market continued to fluctuate, closing at 3061, down 0.03% from the previous trading day. In the spot market, most quotes remained stable, with only a few regions experiencing some price easing, with declines of 10-20 yuan/mt. Trading performance was moderate throughout the day. On the supply side, the situation remained basically stable. Blast furnace steel mills still have profits and have little willingness to cut production. EAF steel mills, constrained by profits and steel scrap collection, mostly maintain production during off-peak and valley periods, with limited room for output increases. On the demand side, as the sentiment boost from the temporary easing of Sino-US trade tensions last week gradually faded, the price center of both futures and spot markets moved lower. Market trading enthusiasm was poor, and the pace of inventory destocking slowed slightly. According to an SMM survey, the total rebar inventory this week was 5.6865 million mt, down 2.43% WoW, with the decline narrowing by 2.7 percentage points from the previous week. Looking ahead, the current supply-demand imbalance in the construction steel market is not prominent. However, influenced by the weak performance of the futures market, end-use demand remains weak. It is expected that construction steel prices will continue to fluctuate rangebound at current levels in the short term.

[SMM HRC] Yesterday, the most-traded HRC futures contract first rose and then fell, closing at 3210, up 0.09%. In the spot market, quotes remained stable throughout the day, with overall trading performance improving. In terms of supply, the weekly HRC production was 3.2452 million mt, down 14,200 mt WoW. Short-term supply pressure remained low, with the impact of subsequent maintenance slightly decreasing but recovery being slow. On the demand side, end-use demand remained resilient in the short term, with inventory in major cities continuing to decline. This week, the total SMM HRC inventory was 4.187 million mt, down 222,300 mt WoW. On the cost side, there are expectations of a decrease in pig iron output, but it will remain in a state of high-level fluctuations, with cost support remaining intact. In summary, HRC will continue to be in a destocking phase in the short term, but the upward driving force is still insufficient. The most-traded HRC futures contract may continue to fluctuate rangebound at current levels in the short term, with the strategy of selling on rallies remaining unchanged.