Forecast: Pig iron output will fluctuate at high levels, steel prices are expected to move rangebound this week

Last week, ferrous metal prices pulled back from high levels. At the beginning of the week, Shanghai real estate market eased purchase restrictions in multiple ways, significantly lowering down payment ratios and mortgage rates. Mid-week, the State Council issued the "2024-2025 Energy Conservation and Carbon Reduction Action Plan," which mentioned strengthening the regulation of steel capacity and output, causing the ferrous metal market to diverge. Approaching the weekend, China announced official manufacturing PMI for May a drop to 49.5%, leading to poor market sentiment and downward-fluctuating market prices. In the spot market, steel prices pulled back from high levels last week, with modest market transactions.

Looking ahead to this week, pig iron output is expected to fluctuate at high levels amid profits of steel mills, providing steady short-term cost support. Entering June, steel prices are expected to recover amid macro sentiments. However, given the increasing steel plate inventories caused by large supply, steel prices have limited upward room. Therefore, steel prices are expected to fluctuate within a narrow range this week.