🔹 1. Middle East Conflict Escalates: Real Impact or Empty Threat?

Last night, Iran made a dramatic statement, claiming it would take an action “the world wouldn’t forget for centuries.”
Initially, this triggered speculation about a possible nuclear escalation. However, the actual move was a launch of 400 missiles, accompanied by a national speech declaring Iran “will never surrender” and will “fight to the end.”

Meanwhile, U.S. sources revealed that Iran is now signaling willingness to negotiate, but added that the current situation is very different from a week ago.
The U.S. is weighing retaliation — military engagement is now a growing possibility.

📌 Implication for the Market:
If the U.S. enters the conflict, it would significantly impact energy, chemicals, and especially coking coal, potentially spilling over into steel prices.

🔸 Strategy Advice:
In light of heightened geopolitical risk, we recommend reducing short positions temporarily to hedge against any upside shocks driven by external headlines.

🔹 2. Domestic Policy Signals: Structural Support, Limited Steel Impact

At the Lujiazui Forum, officials introduced supportive measures targeting:

  • Science & technology innovation,
  • Foreign capital inflow,
  • Renminbi internationalization.

These are all positive long-term signals, but their short-term relevance to the steel sector remains minimal.

🔹 3. Federal Reserve: Dovish but Expected

The Fed’s latest policy meeting concluded with no change in interest rates.
The updated dot plot points to two rate cuts in 2025, which aligns with market expectations.
Overall, the impact was neutral for commodity markets.

🔸 Conclusion & Outlook

  • The primary short-term driver is geopolitical escalation risk.
  • Domestic and macroeconomic data offer limited directional guidance.
  • Steel is currently exposed to external event-driven volatility, not internal supply-demand imbalance.

✅ Trading Strategy:
Temporarily scale back short exposure and monitor geopolitical headlines closely.
Maintain a flexible approach as markets may swing quickly in either direction.

📌 Daily insights provided by LangZo Steel. For reprints, please credit LangZo Steel.