Short-term Steel Prices Lack Upward Momentum

Last week, the average prices of the ferrous metals series declined again. On the news front, macro data such as social financing and investment were released during the week, with social financing increasing by 3.22 trillion yuan less YoY. Real estate data showed a narrowing decline in some indicators due to a series of policies. In the first half of the week, raw material and steel prices fell rapidly, while in the latter half, raw material and rebar prices performed slightly better than HRC. In the spot market, steel prices fell last week, with end-users mostly taking a wait-and-see approach.

In the short term, recent low profits for steel mills have dampened production enthusiasm, and the pressure on furnace charge prices remains. On the steel side, there are certain concerns about the fundamentals of HRC in the current market. Before the reduction in coil production becomes clear, the spread between coil and rebar still has room to narrow further. Considering the current lack of favourable macro front guidance and the difficulty in receiving positive feedback from downstream demand, market bearish sentiment is strong, making it hard for steel prices to gain upward momentum, and they may continue to fluctuate at low levels.