[Subsequent special-purpose bond issuance is expected to accelerate]

Last week, ferrous metals showed a narrow consolidation pattern overall. Among them, coking coal and coke were hit by expectations of the "stable coal production and supply guarantee" policy from three ministries, posting larger declines and hitting new monthly lows; HRC and rebar prices were basically flat; iron ore saw its weekly average edge up MoM, supported by ocean freight rates. The core contradiction remained concentrated in the carbon element: steel mill losses widened, daily hot metal production continued to decline, and steel mills' desire to bargain down raw material prices strengthened; meanwhile, coking coal weakened first under the impact of stable production and supply guarantee policy expectations, and the loosening cost side dragged down the overall valuation of ferrous metals. From a data perspective, HRC spot prices in US dollar terms fell $4/mt MoM, export prices remained relatively firm, sheets & plates export prices showed mixed performance, long steel product prices rose $1-4/mt MoM, and export margins improved slightly. Looking ahead, on the supply side, steel mill hot metal production is expected to continue declining, raw materials are likely to remain under pressure, coking coal and coke may still weaken under the weight of policy expectations, and cost support will loosen further. On the demand side, the low production and low inventory pattern in steel provides some bottom support for prices, and with domestic demand maintaining resilience and overseas demand expected to gradually recover and drive steel export growth, overall steel demand remains on an improving track, with support below prices. On the macro front, repeated tightening expectations outside China are creating periodic pressure on risk assets, market sentiment is unlikely to recover significantly, and price fluctuation space is limited. Overall, with bullish and bearish factors intertwined, ferrous metals lack a trend driver in the short term and are expected to continue consolidating in a narrow range. Export prices will also show a consolidation pattern.

Aug 2026 overseas steel output growth slowed to +1.6% YoY (Jan-Aug: +2.2%). This was driven by an EU contraction linked to inventory overdrafts and logistical constraints, not tariff failures. Middle East recovery and India's growth remain strong. China's production controls are shifting Asian pricing dynamics. Q4 watchpoints include the EU's Oct 1 melt-and-pour regulations, quota resets, and scrap prices returning to the 400 USD/tonne mark.