🔹 Market Characteristics

The current steel market shows a stark divergence: iron ore remains strong, hot-rolled coil (HRC) is firm, but rebar continues to underperform—a persistent weak link.

Warehouse receipt data highlights this imbalance: rebar registered warehouse receipts have surged to 191,000 tons, while HRC receipts stand at just 24,700 tons. This indicates that rebar is flowing into delivery, whereas HRC, supported by solid demand, continues to see receipts cancelled. Heading into September, rebar faces mounting delivery pressure, leaving limited upside potential.

🔹 Profit Dynamics

Iron ore has rebounded to around 792 CNY/ton, levels last seen on August 14–15. At that time, rebar traded at 3,200–3,230, compared with just 3,110 today. In other words, iron ore has rallied, but rebar has failed to follow, widening the gap by nearly 100 CNY/ton. This signals a profit squeeze for steel mills.

Meanwhile, coking coal follows its own logic and is not moving in sync with iron ore, rebar, or HRC.

🔸 Strategy View

The contradiction of “raw materials strong, finished steel weak; HRC firm, rebar weak” is becoming increasingly pronounced. Looking forward, steel mill margins are likely to compress, with coil production rising.

Maintain the strategy of holding core short positions and adding on strength. Any rally should be viewed as an opportunity to build fresh shorts.