Steel Market Report: Domestic steel prices continue to rise and upward momentum weakens

In recent days, a series of key economic indicators such as GDP, fixed asset investment, and real estate development have been released, showing strong performance. These positive data points have boosted market sentiment, leading to significant gains in the stock market, steel futures, and electronic trading platforms. Major steel producers like Angang and Shougang have also announced stable or slightly increased pricing for their new products, which has supported the upward trend in spot market prices. However, industry experts warn that despite the current momentum, new challenges are emerging, with intensified long-short battles and rising risks in the steel market. There could be a narrow range of volatility this week. On July 15, the National Bureau of Statistics reported that China's GDP grew by 7.6% in the first half of the year. Fixed asset investment rose by 20.1% year-on-year, while real estate development investment increased by 20.3%. Industrial output above the designated size expanded by 8.9%, reinforcing the positive outlook. These figures have fueled optimism across the financial markets, with steel futures and electronic trading seeing sharp increases. In addition, major steelmakers introduced new pricing strategies, with ex-factory prices stabilizing or rising modestly, further supporting the spot market. The price of construction steel saw a slight increase, though regional differences were evident. In Beijing, the northern market was affected by continuous rain, resulting in only a small rise, with some prices even dipping slightly. Meanwhile, in Shanghai and other southern regions, demand from construction projects led to higher prices. The Shagang steel plant’s maintenance caused a temporary shortage of certain specifications, making them more valuable compared to the northern market. Hot-rolled coils and plate prices also continued to climb, reflecting strong demand. According to the latest data from the Lange Steel Information Research Center, as of July 19, the Lange Steel Composite Price Index stood at 140.8, up 1.41 points from the previous week. The Long Product Price Index reached 156.6, rising by 1.82 points, while the Sheet Price Index was at 121.7, up 0.78 points. In major cities, the average price of Φ25mm rebar increased across the board, with Guangzhou seeing a rise of 110 yuan and high-end Φ6.5mm rebar jumping by 160 yuan. Hot-rolled coil prices in top-tier cities remained on an upward trend, while cold-rolled coils in Guangzhou surged by 110 yuan, though prices in Beijing saw a slight decline. Despite the overall upward movement, low-cost transactions remain active, but high turnover is less than expected, indicating limited downstream demand and weakening momentum toward the end of the week. Inventory levels continue to decline, marking the 17th consecutive week of reduction. As of July 19, the national steel inventory index fell by 1.75% week-on-week, with the rate of decline slowing slightly. Social inventory for building materials dropped by 2.24%, and slab inventory decreased by 1.21%, both showing a slower decline compared to previous weeks. According to the China Iron and Steel Association, crude steel production by member companies averaged 1.6948 million tons per day in early July, down 3.84% from the previous period. Nationwide, estimated daily crude steel output was 2.083 million tons, a 4.50% decrease. At the end of July, steel inventories in key enterprises reached 12.7554 million tons, up 0.58% from the previous ten-day period. While production has slowed, inventory growth suggests that supply-demand imbalances still persist. Ma Guanghui, an analyst at the Lange Steel Information Research Center, noted that after recent market adjustments, several underlying changes are taking place. On the positive side, environmental protection policies are starting to show results, with some steel mills reducing production and undergoing maintenance, leading to a slight reduction in supply and easing supply-demand tensions. Additionally, cost support has improved. On the negative side, the upward momentum is beginning to weaken, with reduced order acceptance and lower willingness among traders. Some early procurement has been accelerated, and risk control measures are becoming more cautious. With profit margins expanding in certain regions and product types, especially for second- and third-tier dealers, some merchants may take advantage of the situation amid liquidity constraints. Overall, the steel market is expected to see more intense long-short battles, with increasing risks and potential short-term fluctuations.

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