🔹 Market Update

Yesterday, the Steel Union data was a game-changer, with apparent demand surging by 1.3 million tons (up from the usual 700,000 tons). The futures market instantly reacted positively. Despite a slight increase in factory inventory (only up 0.8%), the reality is that direct shipments from steel plants have been robust, indicating that demand is indeed strong.

🔹 Key Insights:

  1. Price Increase is Backed by Real Demand:
    This price surge isn’t driven by speculation; it’s supported by solid, tangible demand from the construction sites and traders restocking their supplies.
  2. Raw Materials (Iron Ore & Coking Coal) Follow the Trend:
    With steel plants running at full capacity, the need for raw materials has escalated, pushing up prices for iron ore and coking coal as well.

🔹 Market Outlook

We are now in the tail end of the rebound phase. The upside potential is limited, though spot market buying still has room to hold up. However, the risk lies in the futures market: while prices could continue to rise, if demand fails to meet expectations, a sharp reversal downward could occur. It’s like fireworks nearing their end—the spectacle seems lively, but the show is about to conclude.

🔹 Operational Strategy

  • Spot Market: It’s still reasonable to hold long positions, as prices may remain stable for the time being.
  • Futures Market: The risk/reward balance is less favorable for longs. Be cautious and keep an eye on any signs of demand weakening, as the market could turn quickly.

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