🔹 Key Theme: Policy Shift Brings Temporary Relief, But the Downtrend Is Not Over

At 1:20 AM this morning, former U.S. President Trump issued a major update on tariff policy. Tariffs on Chinese goods will be raised to 125%, while a 90-day suspension will be granted to countries that do not retaliate.

Following this announcement, global markets reacted strongly. Risk-off sentiment eased, U.S. equity indices surged by 9%–12%, Treasury yields climbed as bond prices fell, and commodities including oil, precious metals, and base metals posted significant gains.

🔸 Market Impact: More Bullish Than Bearish in the Short Term

We believe this news provides short-term positive momentum for the steel market, due to the following reasons:

1️⃣ Transshipment opportunities remain, as the U.S. spares non-retaliating countries. This keeps indirect export routes open, reducing the immediate impact on Chinese steel exports.

2️⃣ Domestic policy response is likely to accelerate. China may roll out economic support measures sooner than expected, such as early issuance of special-purpose bonds or easing of real estate restrictions, which will improve sentiment for construction and manufacturing demand.

🔹 Trading Strategy: Reduce Shorts and Await Rebound

We see this as a pause in the current downward cycle, though not a full reversal of the overall trend. Therefore, our trading recommendation is:

  • Reduce existing short positions starting today
  • Avoid opening new short positions for now
  • Wait for a technical rebound before considering re-entry on the short side

The steel market may stabilize over the next few days, but structural pressure from the ongoing trade war has not been fully lifted. Stay cautious and flexible in your strategy.

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