[SMM Hot-Rolled Daily Review] Fundamentals Under Pressure, Short-Term Adjustments Possible

HRC futures prices were initially stable before declining today, falling 0.89% intraday, with the most-traded contract closing at 3,354. Supply side, some steel mills in Central and South China were affected by maintenance, leading to a slight MoM decrease in HRC production. Demand side, as the US Fed's interest rate cut approaches implementation, downstream procurement demand remains cautious, with many awaiting the resolution of macro narratives, resulting in relatively subdued demand performance during the week. Raw material side, hot metal continued to rebound this week, providing stable cost support for now. Overall, the US Fed's 25-basis-point interest rate cut today met expectations without surprises. Coupled with accumulated social inventory at HRC mills, macro drivers have temporarily faded, while fundamentals are under pressure. Thus, the most-traded HRC futures contract may continue to adjust in the short term, and it is advisable to adopt a wait-and-see approach for now.