1 First of all, this wave of decline is a release of pessimism and will not last long. The Fed's interest rate hike directly caused the US dollar index to rise, which was terrible for the commodity prices settled in US dollars, and the black futures also fell in response. But the September rate hike is only a regular part of the Fed's rate hike process. Compared with the previous three rate hikes, the impact of this rate hike may be marginally weakened, so it is not expected to last long.
2 Secondly, the fundamentals of China PPGI Steel Coil show a stable and positive trend, and it is challenging to drop sharply. Recently, domestic steel market transactions have improved, and policies to stabilize economic growth, such as "guaranteeing the delivery of buildings," have boosted expectations for demand improvement and strengthened the logic of peak season transactions.
3 At the same time, due to the recent resumption of blast furnace production, steel companies' demand for restocking has increased steadily, and iron ore prices have continued to strengthen. In terms of coke, although steel companies have suppressed coal prices in order to improve profits, they are affected by steel companies' rigid demand for purchasing coke companies. Cost support and other factors have limited room for coke prices to fall.
4Finally, raising interest rates may not lead to a sharp decline in China PPGI Steel Coil prices, but it does not mean there is no risk of falling steel prices. In the medium and long term, the increase in demand is a high probability event. However, its increase still needs to be verified by the market, and the resumption of production by steel enterprises has become a downside risk factor that requires special vigilance.
