Ferrous metal futures markets strengthened across the board in mid-to-late July, with major commodities like iron ore, coking coal, and coke all seeing significant increases. In contrast, the steel strand market initially performed relatively flat, but prices subsequently followed suit, driven by rising raw material prices last weekend and early this week.
I. Key Market Performance
The domestic steel strand market saw significant overall growth in July, with diverging increases across regions. Tianjin and Guangzhou saw the largest increases, while other markets saw increases of 50 to 60 yuan per ton. This round of price increases in the steel strand market was primarily driven by cost pressures from rising wire rod prices and improved market expectations driven by policy measures and boosted industry confidence.
II. Price Trends of B-steel in the North and South
B-steel prices in the north and south fluctuated narrowly in the first and middle ten days of July, before rising strongly in the second half of the month. Northern B-steel prices saw a 7.14% increase, while southern B-steel prices saw a more modest 3.97% increase. Consequently, the north-south price gap narrowed in the latter half of the month. July's ferrous futures led the gains, driving prices in the north. The high concentration of steel mills in the north led to rapid price increases. The southern market was impacted by high temperatures and heavy rain, hindering the transmission of futures sentiment and leading to a relatively delayed reaction to price increases.
III. Favorable Macroeconomic Policies
Policy Mainline: The Central Financial and Economic Commission's meeting on "anti-involution" and the urban work conference sent signals, prompting market expectations of a new round of supply-side structural reforms.
Support for Key Industries (July 18): The Ministry of Industry and Information Technology (MIIT) released growth stabilization plans for ten major industries (steel, nonferrous metals, petrochemicals, and building materials) to alleviate overcapacity pressures.
Infrastructure Boost (July 19): Construction on the Yarlung Zangbo River hydropower project commenced, strengthening the supporting role of infrastructure and facilitating a smooth economic transition. Steel demand is expected to increase.
Energy Regulation (July 22): The National Energy Administration inspected coal mine production to ensure stable coal supply and mitigate price volatility risks.
Optimizing Market Order (July 23-24): The National Development and Reform Commission promoted collaboration between state-owned and private enterprises, addressed inefficient competition, and optimized industrial chain cooperation. Public comment was sought on revisions to the Price Law, detailing the regulation of unfair pricing practices and curbing vicious market competition. Policy Direction: Stabilize growth, adjust the structure, prevent involution, and promote high-quality development.
A series of recent policies have significantly boosted the market, injecting momentum into macroeconomic stabilization and supporting ferrous metal prices. Market sentiment continues to improve, and investors remain optimistic about the potential signals of stabilizing growth from the Politburo meeting at the end of the month.
