[SMM HRC Daily Review] Expectations of "anti-cut-throat competition" strengthen, HRC prices hold up well

Today, HRC futures surged strongly, with the most-traded contract closing at 3,191, representing a daily increase of 2.24%. In the spot market, spot prices rose by 10-40 yuan/mt, with trading volume picking up. In terms of supply, the impact from maintenance on hot-rolled production this week was 19,600 mt, a decrease of 32,800 mt WoW. Next week, the impact from maintenance on hot-rolled production is expected to be 2,800 mt, a decrease of 16,800 mt from this week. The impact from maintenance on hot-rolled production has reached its lowest point, further increasing the supply pressure of HRC. In terms of demand, the end-use demand from the manufacturing sector remains relatively resilient, but signs of seasonal decline are also emerging. On the cost side, according to the SMM survey, under the influence of production control policies, pig iron production decreased by 4,200 mt this week, but still remained at a high level. The support from furnace charge is unlikely to collapse in the short term. Looking ahead, the signal released by the Central Financial and Economic Affairs Commission meeting yesterday regarding addressing cut-throat competition has strengthened market expectations for the July Central Political Bureau meeting. The pressure on the supply and demand structure may be expected to ease temporarily. In reality, the fundamental contradictions in the HRC market are not yet acute, and coupled with moderate cost support, it is anticipated that the most-traded HRC futures contract will continue to consolidate at a high level in the short term.