Report Summary 1. Report Industry Investment Rating - Not provided in the content 2. Core View of the Report - Since late July, the spot and futures prices of rebar have weakened. The main futures price has fallen by 4.43% from its high, and the spot price in mainstream areas has dropped by 30 - 90 yuan/ton. The correction of optimistic sentiment and the accumulation of industrial contradictions in the steel market have led to the decline of steel prices. Currently, the demand for rebar remains weak, the supply benefits are limited, and the fundamental contradictions are accumulating. It is expected that steel prices will fluctuate under pressure, and attention should be paid to changes in production restriction policies [2][7] 3. Summary by Relevant Catalogs Optimistic Sentiment Correction - Since July, the dominant logic in the ferrous metal market has been the policy - driven positive expectations from "anti - involution." However, with limited policy implementation, the previous optimistic sentiment has been corrected. The Politburo meeting on July 30 changed the wording on capacity governance, and did not directly mention real - estate policies, weakening market expectations. The manufacturing PMI in July was 49.3%, down 0.4 percentage points from June, affected by the traditional off - season and natural disasters [3] - From the perspective of key industries, the PMIs of the equipment manufacturing and high - tech manufacturing industries were above the critical point, while the PMI of the consumer goods industry decreased by 0.9 percentage points from June, and that of the high - energy - consuming industry increased by 0.2 percentage points. The production and operation activity expectation index in July was 52.6%, up 0.6 percentage points from June, indicating increased confidence among manufacturing enterprises [4] Supply Benefits Limited - As of the week ending August 1, the total inventory of rebar was 546290 tons, an increase of 7650 tons from the previous week, but still at a low level in recent years, with a year - on - year decrease of 196080 tons (26.41%). The rebar market shows a situation of weak supply and demand, and the fundamental contradictions are easy to accumulate. The weekly output of rebar is relatively low at 211060 tons, a decrease of 22830 tons from the previous high, mainly due to long - process steel mills' product transformation [5] - The positive effect of low supply is limited. Some steel mills that previously produced billets have returned to rebar production, and the profitability of short - process steel mills has improved significantly. The proportion of profitable steel mills among 90 independent electric arc furnaces is 52.89%, and the loss ratio is only 12.4%. Their operating rate has reached a high for the year, which will increase rebar supply. However, steel mills around Beijing may suspend production to ensure the smooth progress of the September 3 parade, which may boost the steel market sentiment [5][6] Demand Remains Weak - Due to weak demand, industrial contradictions in rebar continue to accumulate. As of the week ending August 1, the weekly apparent demand for rebar was 203410 tons, a new low, down 5.67% year - on - year. Cement out - bound volume and concrete shipment volume, which directly reflect terminal demand, are also weak, down 10.43% and 4.91% year - on - year respectively [7] - The real - estate sales are sluggish, and there is no substantial improvement in the downstream industries of rebar. The weak demand pattern remains unchanged. The increase in steel prices in July stimulated the release of investment demand, and the increase in the number of rebar warehouse receipts on the SHFE may further increase the pressure on the demand side [7]

Core Viewpoint - Since the end of July, rebar prices have weakened, with the main futures price dropping by 4.43% from its peak, and spot prices in major regions have also declined by 30 to 90 yuan per ton, indicating a correction in optimistic sentiment and accumulated industry contradictions putting pressure on steel prices [1] Group 1: Market Sentiment and Policy Changes - The dominant logic in the black metal market since July has been the policy expectations brought by "anti-involution," but the limited realization of these expectations has led to a correction in optimism [2] - The Politburo meeting on July 30 emphasized the need to regulate disorderly competition in enterprises and advance capacity governance in key industries, which has altered market expectations regarding the "anti-involution" policy [2] - The absence of direct mentions of real estate in the recent Politburo meeting has weakened expectations for loosening policies in the real estate sector [2] Group 2: Manufacturing and Economic Indicators - The manufacturing PMI for July was reported at 49.3%, a decrease of 0.4 percentage points from June, influenced by seasonal production slowdowns and adverse weather conditions [2] - The PMI for equipment manufacturing and high-tech manufacturing remained above the critical point at 50.3% and 50.6%, respectively, while the consumer goods industry PMI fell to 49.5%, down 0.9 percentage points from June [3] - The production and business activity expectation index for July rose to 52.6%, indicating improved confidence among manufacturing enterprises regarding market development [3] Group 3: Supply and Demand Dynamics - As of August 1, rebar inventory totaled 5.4629 million tons, an increase of 76,500 tons from the previous week, but still down 1.9608 million tons year-on-year, reflecting a 26.41% decrease [4] - The current market for rebar shows a dual weakness in supply and demand, with production declining to 2.1106 million tons per week, down 228,300 tons from previous highs [4] - Despite low supply, the positive effects are limited as some steel mills are returning to rebar production due to good profit margins, and the operating rate of electric arc furnaces has risen to a high level [4] Group 4: Demand Weakness - The weekly demand for rebar as of August 1 was 2.0341 million tons, a new low, down 5.67% year-on-year, indicating persistent weakness in demand [6] - Cement and concrete shipment volumes have also shown declines of 10.43% and 4.91% year-on-year, respectively, further confirming weak demand in construction-related sectors [6] - The real estate market remains sluggish, with no substantial improvements in downstream industries, and infrastructure investment is unlikely to increase significantly [7] Group 5: Market Outlook - The correction in market optimism has led to a decline in rebar prices, with the operational logic of the steel market returning to industry fundamentals [7] - The weak demand situation is expected to persist, and the limited supply benefits may not significantly alleviate the pressure on prices, indicating a potential for continued price fluctuations [7]