Market Overview

Welcome back! As we approach the first trading session after the Spring Festival, global markets have seen moderate movements. Crude oil declined, while copper and aluminum first dropped and then rebounded. The FTSE A50 and overseas iron ore followed a similar pattern. Overall, price levels remain close to pre-holiday closing levels, suggesting that the black series futures may see an initial adjustment followed by range-bound movement in the coming days, with limited major volatility in the short term.

Macro Insights

The most significant development over the holiday period was Trump’s announcement of a 10% tariff increase on Chinese goods. When the news broke, the FTSE A50 and overseas iron ore initially plunged but soon rebounded. In the short term, this is a bearish factor—higher tariffs strengthen the U.S. dollar, weaken trade prospects, and dampen commodity demand. However, in the long run, the impact is uncertain. China is expected to introduce stimulus policies to counteract the external shock, and commodity supply-demand fundamentals remain key. Additionally, if tariffs push up overall product costs, inflationary pressures could rise, further influencing market sentiment.

Black Series Outlook & Strategy

For 2025, a downward trend in steel demand remains the dominant theme. Post-holiday, market focus will shift to inventory drawdowns and the impact of tariffs on export demand. From a fundamental perspective, the first half of the year presents a bearish outlook, with a higher probability of downward price movement. However, given macroeconomic uncertainties, both bullish and bearish phases may emerge.

For now, with rebar at 3,382, hot-rolled coil at 3,485, and iron ore at 810, a spread trading (long-term arbitrage) strategy appears favorable. Short-term speculative long positions carry significant risks at these levels. A clearer directional move is expected after China’s Two Sessions in late February to early March. Until then, a cautious and tactical approach is recommended.

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