Core Viewpoint - The steel market is experiencing a decline in futures prices while spot prices remain under pressure, indicating a potential shift in supply and demand dynamics [1] Supply - Iron element production from January to July increased by 18 million tons, a growth rate of 3.1%. In August, production rebounded compared to July, primarily due to a significant increase in scrap steel consumption [3] - Current pig iron production is stable at 2.41 million tons, with daily scrap consumption at 558,000 tons, reflecting a 0.6% increase month-on-month [3] - The total production of the five major steel products increased by 24,000 tons to 8.716 million tons, with rebar production decreasing by 7,000 tons to 2.205 million tons and hot-rolled coil production increasing by 7,000 tons to 3.156 million tons [3] Demand - From January to July, the apparent demand for the five major steel products remained flat year-on-year, with a slight decrease of 0.2%, while production fell by 1.3% [4] - Domestic demand decreased year-on-year, while external demand increased significantly, with both direct and indirect steel exports rising [4] - The apparent demand for rebar decreased, negatively impacting overall demand, with total apparent demand for the five major products down by 150,000 tons to 8.31 million tons [4] Inventory - This week saw a significant increase in inventory, primarily driven by traders, while steel mill inventory saw a modest rise. The total inventory of the five major products increased by 406,000 tons to 14.16 million tons [5] - Rebar inventory rose by 305,000 tons to 5.872 million tons, while hot-rolled coil inventory increased slightly by 8,400 tons to 3.575 million tons [5] Cost and Profit - On the cost side, coking coal production continues to recover, while iron ore inventories at ports have slightly increased. The supply is expected to decline seasonally, but steel mill production remains high, limiting inventory accumulation pressure [2] - Costs are rising, but steel prices are also increasing, leading to improved profitability for steel mills, with profits ranked from high to low as: billet > hot-rolled coil > rebar > cold-rolled coil [2] Market Outlook - The black metal market continues to show weakness, with technical indicators suggesting a double top formation. Despite stable high production levels, significant inventory accumulation is observed [6] - The current high production levels at steel mills and seasonal demand decline in August are expected to lead to increased inventory, although the pressure on steel mills remains limited [6] - Short-term expectations indicate that production limits may alleviate the pressure from high production and trader inventories, with prices anticipated to remain stable at high levels until demand clarity emerges [6]

Core Viewpoint - The steel market shows signs of price increases driven by rising costs and demand recovery, with specific price movements noted in various steel products [1][2][4]. Supply - Iron element production from January to July increased by 18 million tons, a growth rate of 3.1%, with production in July remaining stable compared to June [3] - The production of rebar rose by 100,000 tons to 2.21 million tons, indicating a notable recovery in rebar production [3] - Hot-rolled steel production decreased by 79,000 tons to 3.14 million tons, showing a significant decline [3] Demand - From January to July, the apparent demand for the five major steel products remained nearly flat, with a slight decrease of 0.2%, while production fell by 1.3% [4] - Domestic demand decreased year-on-year, but external demand increased significantly, with direct and indirect steel exports rising [4] - The apparent demand for rebar increased by 74,000 tons to 2.108 million tons, while hot-rolled steel demand decreased by 138,000 tons to 3.06 million tons [4] Inventory - Inventory levels have increased for two consecutive weeks, primarily due to rising trader inventories, while steel mill inventory growth was not significant [5] - The inventory of the five major steel products rose by 235,000 tons to 13.754 million tons, with rebar inventory increasing by 103,900 tons to 5.567 million tons [5] - The supply-demand balance for rebar has improved, while the supply-demand situation for plate products remains weak [5]

Supply - Iron element production shows signs of decline, with daily pig iron output decreasing by 0.87 million tons to 2.447 million tons; scrap steel daily consumption remains stable at 0.545 million tons. The total output of the five major materials decreased by 0.058 million tons to 8.684 million tons, with rebar production increasing by 0.03 million tons to 2.265 million tons, and hot-rolled coil production decreasing by 0.084 million tons to 3.12 million tons. Cumulative iron element production from January to April increased by 11.5 million tons year-on-year, with a daily increase of nearly 0.1 million tons [2] Demand - Demand for steel has been revised upward due to the May Day holiday, with total demand for the five major materials increasing by 0.687 million tons to 9.138 million tons. Rebar demand increased by 0.46 million tons to 2.603 million tons, and hot-rolled coil demand increased by 0.2 million tons to 3.295 million tons. Steel exports from January to April reached 37.89 million tons, an increase of 2.87 million tons year-on-year, with a daily increase of 0.024 million tons [3] Inventory - Steel inventory continues to show a trend of reduction, with total inventory of the five major materials decreasing by 0.45 million tons to 14.307 million tons. Rebar inventory decreased by 0.338 million tons to 6.2 million tons, and hot-rolled coil inventory decreased by 0.1755 million tons to 3.476 million tons [4] Cost and Profit - Coking coal prices have decreased, leading to a slight increase in steel prices and an expansion of profits. The profit for rebar at integrated steel mills remains at 50 yuan per ton, while hot-rolled coil maintains a profit of 100 yuan per ton. Electric arc furnace steel mills face a cost of 3169 yuan for off-peak electricity, with rebar electric arc furnace mills currently in a loss position [5] Market Outlook - Weekly data indicates a decline in iron element production, but current inventory and profit levels are sufficient to support high pig iron production. Steel inventory is decreasing, but cold-rolled and coated inventory is accumulating. As the industry approaches the off-season, attention is shifting to the potential decline in industrial material demand. The cost side shows a continuous drop in carbon elements, negatively impacting steel prices. The industry is characterized by high production, low inventory, weak cost support, and a recovery in demand expectations. Seasonal off-peak demand and potential declines in manufacturing demand (exports) are anticipated. Technically, prices face resistance at the 40-day moving average, with a weak market outlook. However, the current demand decline is not significant, and exports remain high, suggesting a low-price fluctuation trend, with attention on support levels for rebar and hot-rolled coil at 3000 and 3150 yuan respectively. The recommendation is to remain cautious for now [6]