CITIC Construction Investment Futures: Black Series Morning Report on April 7

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Steel Material Morning Report: Weak Cost Support, Steel Futures Fluctuate Slightly Weak

Market Information:

1. Trump stated that if Iran does not “surrender” before 8:00 PM Eastern Time on April 7, he will launch strikes on Iran’s civilian infrastructure. The U.S. military can destroy Iran’s bridges and power plants in just 4 hours. Iran could be overwhelmed overnight, perhaps by the evening of the 7th.

2. The White House announced that starting April 6, the U.S. will adjust tariffs on imported steel, aluminum, copper, and related derivative products. The new policy mandates verification of the origin of raw materials across the entire steel and aluminum supply chain and expands the scope of derivative product taxation, overturning the previous “deep processing exemption” rule, fundamentally cutting off this re-export tax avoidance route.

3. According to the Shanghai Real Estate Trading Center, in March, Shanghai’s second-hand housing (including commercial) totaled 31,215 transactions, the highest in nearly five years. Data from Centaline Property shows that in March, Shanghai’s new commercial residential transaction area was 563k square meters, a surge of 251.6% month-on-month, with an unprecedented rebound.

4. In March, China’s manufacturing, non-manufacturing, and composite PMI output indices all returned to expansion territory, at 50.4%, 50.1%, and 50.5% respectively, up 1.4, 0.6, and 1 percentage point from the previous month.

5. The China Passenger Car Association: In March, retail sales of passenger cars nationwide were 1.66M units, down 15% year-on-year; first quarter retail sales were 4.24M units, down 17% year-on-year. Among them, new energy vehicle retail sales were 784k units, down 21% year-on-year.

6. According to the latest production scheduling data from Aowei Cloud Network, the total domestic air conditioner production in April 2026 is expected to decrease by 9.4% year-on-year, with domestic sales down 6.8% and exports down 12.6% due to multiple factors.

7. Last week, 247 steel mills had blast furnace operating rates of 81.03%, an increase of 1.25 percentage points from the previous week; steel mill profit rates were 43.29%, up 0.87 percentage points; daily pig iron production was 2.3109 million tons, an increase of 29.4k tons week-on-week.

8. In terms of supply, last Friday, the five major steel products had a total supply of 8.5151 million tons, an increase of 119.3k tons or 1.4% week-on-week. Production of the five major steel products increased in all categories except cold-rolled steel, which slightly decreased. In terms of inventory, total steel inventory last Friday was 18.5045 million tons, down 473.9k tons or 2.5% week-on-week. In terms of consumption, the five major products consumed 784k tons, up 1.2%; among them, construction materials consumption increased by 0.5% and sheet steel by 1.6% week-on-week.

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

Rebar:

From an industry data perspective, last week, rebar production shifted from decline to growth, increasing by a total of 92.3k tons. Warehouse stocks decreased less, down 105.1k tons to 29.4k tons. Social inventory decreased by 106.5k tons to 119.3k tons. The apparent demand increased by 473.9k tons to 8.99M tons. Currently, the continuous release of demand is weak, and due to fluctuations in futures markets, the market lacks upward momentum. Raw material prices for dual coke continue to decline, further weakening cost support. Coupled with rising market caution and risk aversion, funds are leaving the market, and steel prices continue to decline. In the short term, costs will still weigh on the market, and it is expected that construction steel prices will continue to fluctuate weakly.

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

Hot Rolled Coil:

Last week, production continued to slightly increase, up 0.6 million tons week-on-week, with total inventory decreasing by 92.3k tons to 4.3922 million tons. Apparent demand rebounded by 663,000 tons to 3.2026 million tons. Currently, demand for hot rolled coil is recovering faster than rebar, driven by actual demand revival and market confidence restoration, accelerating warehouse de-stocking. On the cost side, raw materials such as iron ore and coking coal have declined, weakening steel cost support. It is expected that hot rolled coil prices will continue to fluctuate weakly.

Strategy-wise, for the rebar 2605 contract, focus on the 3050-3150 range; for the 2610 contract, focus on 3100-3200. For hot rolled coil 2605 contract, focus on 3250-3350; for the 2610 contract, focus on 3250-3350.

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

Ferrous Alloys: Upstream factories reducing production

Viewpoint: Neutral

Upstream factories are significantly reducing production, with weekly silicon iron output at 100.9k tons, down 1,200 tons week-on-week; silicon manganese weekly output at 178.9k tons, down 1,270 tons. Silicon iron factory inventories are increasing, with warehouse stock rising, and upstream inventories have increased for three consecutive weeks; silicon manganese inventories are relatively stable, maintaining high levels. Due to high alloy costs and limited production profits, some enterprises are strictly implementing reduction plans. On the demand side, steel mills continue to restart, and downstream procurement is mostly on demand. Overall, the supply and demand fundamentals still limit alloys from maintaining high levels of fluctuation. In the short term, silicon iron 05 contracts are supported at 5,700-5,750 yuan/ton, and silicon manganese 05 contracts at 6,050-6,150 yuan/ton.

Viewpoint: The highest strike price remains bullish, continue to hold call options.

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