Market Analysis:
Is the rebound over, or is this merely a “pullback to gather momentum”? Determining whether to adopt a “low long” or “high short” strategy is critical, as misjudgment here could lead to significant losses.

Our perspective leans toward the rebound not being over; this pullback is likely a “pause to take on passengers.” Thus, our current strategy is to avoid shorting and prioritize either observation or light long positions.

Yesterday, the market was shaken by the news of a 25% tariff imposed on Mexico and Canada during Trump’s first day in office. Industrial products saw a notable decline as market sentiment shifted negatively, fearing this tariff policy may eventually extend to China.

From an industry perspective, tensions are building and could culminate around the Lantern Festival (15th day of the first lunar month). Current profit margins for steel mills remain reasonable:

  • Electric arc furnace costs are at 3180, with profits still achievable.
  • Blast furnaces enjoy even higher profitability, supporting a stable production outlook.

Given these fundamentals, we do not expect the rebound to achieve significant new highs.

Strategic Recommendations:

  1. Avoid Shorting:
    • Current conditions are unfavorable for short positions.
  2. Adopt a Light Long Strategy:
    • Focus on short-term, small-scale long positions as the primary speculative approach.
  3. Observe Key Indicators:
    • Monitor shifts in production costs, sentiment, and global policy impacts for further signals.

Our primary view is that the rebound remains intact, though with limited upside potential. Patience and cautious positioning are key.

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