[SMM HRC Daily Review] Supply tightens expected to continue, HRC prices hold up well

Today, HRC futures initially declined and then rebounded, with the most-traded contract closing at 3208, marking a daily increase of 1.45%. In the spot market, spot prices stabilized and showed signs of upward movement, with trading volume increasing. However, some of the activity was attributed to calendar spread arbitrageurs entering the market, and there was no significant increase in end-use demand. In terms of supply, this week's HRC production increased by 2,900 mt MoM, with weekly production reaching 3.3685 million mt. The supply pressure for HRC remains relatively high. On the demand side, terminal demand in the manufacturing sector remains relatively resilient, but seasonal decline trends have also emerged. 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 it still remains at a high level. The support from furnace charge is unlikely to collapse in the short term. Looking ahead, the current supply pressure for HRC is intensifying, and total inventory continues to accumulate, but the absolute contradiction remains relatively small. The market still expects relief from the pressure on the supply-demand structure at the July Central Political Bureau meeting, 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.