Multiple factors intertwined and interacted, causing the steel market to maintain a range-bound trading pattern.
The current steel market is exhibiting a dynamic of tug-of-war between bulls and bears, with prices fluctuating within a range. Multiple factors, including supply and demand, costs, and policy, are creating a balance, making it difficult for the market to establish a unilateral upward or downward trend. The overall market is operating at a more stable pace. From the perspective of the industry's overall performance, the market has moved away from its previous pattern of large fluctuations and entered a period of weak equilibrium adjustment. Price fluctuations are narrowing, and the industry's operational stability is gradually improving.
On the supply side, industry capacity control policies are being implemented continuously, with requirements for capacity replacement and ultra-low emission upgrades progressing steadily, effectively curbing disorderly production increases. Currently, the overall steel supply remains relatively high, but the growth rate has slowed significantly. Small and medium-sized steel mills are cautiously releasing capacity, while leading companies are dynamically adjusting their production load based on market demand. Fluctuations in raw material prices have become the core factor affecting supply costs. High and volatile prices for raw materials such as iron ore and coking coal have increased the overall cost of steel production, providing solid support for steel prices and significantly limiting the downside potential.
On the demand side, structural differentiation is evident, with the overall recovery pace being relatively slow. Demand for construction steel has entered a temporary off-season due to the outdoor construction environment, with weak purchasing intentions at construction sites. Most companies are adopting a buy-on-demand, small-scale replenishment model, resulting in fewer bulk transactions. In contrast, demand for industrial steel sheets has shown resilience. Steel demand from equipment manufacturing, general equipment, and new energy supporting sectors continues to be released, effectively offsetting the weak construction demand and making steel sheet performance significantly better than long steel products.
Market sentiment is generally cautious, with traders generally avoiding large-scale stockpiling and focusing on quick turnover to reduce inventory risk. Overall industry inventory levels remain at a healthy low, and inventory reduction is proceeding smoothly. Industry analysts believe that the current market is in a phase of overlapping policy transition and demand shift, making it difficult to break out of the current oscillating pattern in the short term. Subsequent trends will depend on the strength of demand recovery and changes in raw material costs, continuing the narrow range of fluctuations, and structural differentiation is likely to persist.
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