🔹 Market Overview

Technical Analysis:
The ferrous complex experienced a broad-based decline with rising volume and open interest on Monday.

  • Rebar main contract saw a 200,000-lot build, while HRC added 100,000 lots, indicating aggressive bearish positioning by major funds.
    However, notable signs include:
  1. Finished steel products only fell by ~1%, and rebar hovered around the critical 3000 level, lacking a decisive breakdown.
  2. Coking coal remained relatively resilient, with iron ore leading the downside.
  3. The overnight rebound was driven mainly by short covering, not active long-side buying, indicating a weak bounce.
    Overall, the technical pattern reflects a bearish continuation phase.

🔸 Fundamental Observations

The physical market is showing signs of divergence:

  • Tangshan strip steel dropped by 10–20 RMB, while Ruifeng dipped only 10 RMB; billet prices fell marginally by 10 RMB.
  • Basis trading shows some resilience in spot prices, suggesting underlying support.

Caution remains warranted due to:

  • Steel mill margins remain between 50–150 RMB/ton, offering little incentive for voluntary production cuts.
  • Mill inventories are expected to keep rising, which continues to add bearish pressure.

🔸 Newsflow Summary

  1. Shandong Production Cut Rumors: No official policies have been released; market sentiment likely driven by recycled speculation.
  2. Global Trade: The Trump-era tariff increase on EU steel has been postponed amid ongoing negotiations, minimizing near-term impact on the ferrous complex.

🔹 Outlook and Strategy
Despite a short-term consolidation bias, the underlying downtrend remains intact. Traders are advised to maintain a sell-on-rally approach, as key structural headwinds persist.

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