CITIC Securities Futures: March 16 Black Commodities Morning Report

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Steel Daily Report: Demand Starts Up + Cost Support, Futures Steel Prices Fluctuate Slightly Higher

Market Information:

1. The draft of the 2026 National Economic and Social Development Plan was released, mentioning that in 2026, efforts will continue to improve quality, reduce costs, and cut emissions in key industries: (1) Strengthen capacity regulation in key industries, standardize market prices, and implement comprehensive measures to curb “involution” competition. (2) Promote supply-demand balance and stability in steel, non-ferrous metals, building materials, petrochemicals, and chemical industries, with significant improvements in corporate profitability and continuous reductions in energy consumption and carbon emissions per unit product. (3) Orderly reduce capacity in steel, refining, and other industries, strengthen capacity regulation in copper smelting, alumina, coal chemicals, and optimize the layout of ethylene and PX0> para-xylene industries.

2. On March 13, nationwide main port iron ore transactions totaled 575,000 tons, down 30.7% month-on-month; 237 mainstream traders’ building steel transactions reached 101,200 tons, up 14.5% month-on-month.

3. Last week, the capacity utilization rate of blast furnaces in 247 steel mills was 82.92%, down 2.40 percentage points from the previous week and down 3.65 percentage points year-on-year; steel mills’ profit rate was 41.13%, up 3.03 percentage points week-on-week but down 12.12 percentage points year-on-year.

4. According to Century Construction Survey, as of March 11 (the 23rd day of the lunar new year), the nationwide construction site resumption rate was 42.5%, up 19 percentage points from the previous week, but down 5.2% year-on-year; labor work rate was 43.9%, up 14.2 percentage points week-on-week, down 5.8% year-on-year; fund availability rate was 42.8%, up 7.4 percentage points from the previous week, down 0.8% year-on-year.

5. Last week, supply of five major steel products was 8.2097 million tons, up 237,300 tons from the previous week; total steel inventory was 19.7489 million tons, up 228,900 tons. Among them, mill inventory was 5.5161 million tons, up 27,400 tons; social inventory was 14.328 million tons, up 201,500 tons. The total inventory of rebar increased by 1.849 million tons to 8.9417 million tons, with apparent demand increasing by 785,800 tons to 1.7681 million tons. Hot-rolled coil total inventory slightly decreased by 10,000 tons to 4.7159 million tons, with apparent demand increasing by 137,900 tons to 2.9536 million tons.

(Chu Xinli, Futures Trading Consulting Industry Information: Z0018419, for reference only)

Rebar:

In terms of industry data, last week rebar production increased by 219,900 tons to 1.953 million tons, with mill inventory growth narrowing, totaling an increase of 16,900 tons. Social inventory continued seasonal accumulation, with high inventory levels, and electric furnace re-starts concentrated, so market supply and demand still face contradictions. Spot market data shows that market procurement enthusiasm has improved, and transaction volume has increased. On the cost side, raw materials like iron ore and coking coal have retreated, weakening steel cost support. It is expected that construction steel prices will continue to fluctuate.

(Chu Xinli, Futures Trading Consulting Industry Information: Z0018419, for reference only)

Hot-rolled Coil:

Last week, hot-rolled coil output decreased by 58,500 tons to 2.9526 million tons, total inventory decreased by 100,000 tons to 4.7159 million tons, and apparent demand increased by 137,900 tons to 2.9536 million tons. Downstream terminal demand is gradually starting, with increased just-in-time replenishment, and re-starts are gradually increasing, so demand is gradually picking up. Social inventory accumulation has slowed, slightly higher than the same period last year; attention should be paid to subsequent inventory digestion. On the cost side, raw materials like iron ore and coking coal have retreated, weakening steel cost support. It is expected that hot-rolled coil prices will continue to fluctuate.

Strategy: For rebar 2605 contract, focus on 3050-3200 range; for hot-rolled coil 2605 contract, focus on 3180-3350 range.

(Chu Xinli, Futures Trading Consulting Industry Information: Z0018419, for reference only)

Ferrous Alloys: High-level Fluctuation

Viewpoint: Neutral

Overall alloy supply remains low; weekly output slightly increased, but prices still positively stimulate supply, so alloy production is expected to gradually increase. High prices stimulate factories to transfer inventory to delivery warehouses. The increase in silicon iron warehouse receipts is roughly consistent with factory inventory reduction, while manganese silicon warehouse receipts have increased significantly more than factory inventory reduction. Currently, high prices and high inventories mean companies are still willing to sell. On the supply and demand side, downstream acceptance of high prices is limited, but steel mills are entering a recovery cycle, and consumption demand is gradually improving. Overall, short-term alloy prices are in a high-level fluctuation stage, with silicon iron 05 contracts supported at 5600-5700 yuan/ton, and silicon manganese 05 contracts supported at 5900-5950 yuan/ton, with resistance near previous highs.

Viewpoint: Continue to hold out-of-the-money put options at strike 4, and continue to hold out-of-the-money call options at the highest strike.

(Zhang Shaoda, Futures Trading Consulting Industry Information: Z0017566, for reference only)