Market Analysis: V-Shaped Rebound Brings Optimism for the Week
Friday night’s session witnessed a V-shaped rebound with a long lower shadow, indicating strong recovery momentum. The market saw reduced open interest with increased trading volume, signaling a return to range-bound behavior near the lower edge of the previous trading range.

Key Market Drivers

  1. Strong Fundamentals for Finished Steel
    • Low inventory, reduced production, and strong basis for finished steel products create a favorable setup for short-term gains.
    • As the January contract approaches delivery, physical supply-demand dynamics exert greater influence.
  2. Iron Ore’s High Valuation
    • Elevated iron ore prices present a bearish overhang. High margins are unsustainable under current low production levels, potentially leading to a drag on steel prices after a short-term rebound.
  3. Supply-Demand Dynamics
    • The fundamental principle remains clear: short supply in spot markets suggests stronger steel prices, while oversupply pressures prices downward. Current supply-demand fundamentals lean bullish for this week.

Outlook for the Week

  • A mild rebound in steel prices is anticipated, with the weekly trend likely to close positive.
  • For rebar, resistance is seen near 3380, with support at 3250. Price movement is expected to fluctuate within this range.

Trading Strategy

  • Adopt a short-term long position approach this week, leveraging the expected rebound.
  • Maintain a bearish view on the longer trend, with an eye on iron ore leading another downturn as January progresses.
  • Closely monitor supply-demand metrics for timely adjustments.

The market presents opportunities for strategic positioning this week, with a mix of caution and optimism guiding decision-making.

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