**Steel Prices Experience a Temporary Rebound Amid Ongoing Challenges**
Since the beginning of March, domestic steel prices have continued to fall, hitting new annual lows. The market has been in a state of pessimism, with traders struggling to move inventory and manage cash flow. Despite some initial signs of recovery at the start of the month, the market remained weak, with no significant improvement in demand. Merchants found themselves caught between high inventory levels and tight capital availability, forcing many to cut sales prices passively.
Meanwhile, long-term capital markets such as futures and electronic trading platforms also saw sharp declines, further deepening trader concerns. As a result, bearish sentiment increased, and market confidence weakened. End-users, too, became more cautious due to the ongoing price drops in the spot market, leading to reduced purchasing intent and sluggish transaction volumes.
As of March 7, steel prices showed further declines. In Shanghai, the transaction price for 8mm HRB400 rebar was 3,190 yuan/ton, down 70 yuan/ton from the previous weekend. The price for 6.5mm HRB300 high-line stood at 3,170 yuan/ton, a decrease of 10 yuan/ton. For 20mm HRB400 rebar, the price dropped by 50 yuan/ton to 3,110 yuan/ton. Hot-rolled coils (5.5*1500 HRC) remained flat at 3,400 yuan/ton, while 1.0*1250 galvanized sheet prices fell by 30 yuan/ton to 4,190 yuan/ton.
The decline in steel prices since the Spring Festival has been consistent and largely one-sided. Several factors have contributed to this trend. First, uncertainty around policy measures and weak demand have led to low market turnover, making it difficult to support stable pricing. Second, a surge in short-term supply has created an imbalance between supply and demand, increasing market pressure. Third, the prolonged price drop has fueled trader pessimism, leading to panic selling. Finally, credit issues within the national steel trade sector have intensified financial strain, causing severe disruptions in the steel trade capital chain.
Looking ahead, the author believes that as the current period of weakness comes to an end, the steel price trend will gradually stabilize. With the approaching **(specific event or period), major market policies are expected to be implemented, prompting downstream industries to finalize their production and operational plans for the year. As temperatures rise and rainy weather subsides, end-user operating rates are expected to increase, boosting purchase demand slightly.
Market feedback indicates that although prices are still declining overall, shipments have improved significantly compared to the previous period. This has led to a slight rebound in steel prices in certain regions, signaling a gradual warming of market demand. Additionally, last week’s data showed that total market inventory dropped to 20.57 million tons, ending a 10-week streak of rising inventories and marking the start of the destocking process.
On the policy front, the government’s focus on economic growth and infrastructure development is expected to support steel prices. Premier Li Keqiang’s 2014 government work report set a GDP growth target of 7.5%, indicating that the government will not allow a sharp economic downturn. A new fiscal deficit of 1.35 trillion yuan is also expected to stimulate domestic consumption. Moreover, the development of social security housing and urbanization projects will drive demand for steel. The planned elimination of 27 million tons of outdated steel production capacity will help reduce overcapacity and ease market pressure.
In summary, while steel prices remain under downward pressure, there are signs of a slight upward trend in market demand. With rising raw material costs, steel prices are expected to stabilize in the short term. The coming weeks may bring clearer signals about the direction of the market.
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